Don’t Let Old Habits Pull You Back into Bankruptcy

Those who don’t learn from the mistakes of the past are doomed to repeat them. So if you have recently emerged from bankruptcy, it is important to take a long hard look at what got you there and resolve to avoid making the same mistakes again. While some people end up in bankruptcy due to a stroke of bad luck — such as job loss, illness or a bad investment — many others simply spend outside of their means until debt becomes overwhelming.

Consistently spending outside of your means is often a first step toward an eventual bankruptcy. When it involves luxury items, it is fairly easy to curtail. But when it involves every day items like food, clothing and housewares — which account for over 30 percent of household expenditures — it can be much more challenging. Using credit cards to cover these expenses can be tempting, especially when there is such easy access to revolving high-interest credit even for people with a troubled credit history. But consistently carrying a balance on credit cards is a surefire way to create debt problems.

No one likes budgeting, but sometimes it is necessary to keep spending in check. Placing self-imposed limits on your spending may give you the incentive you need to make the tough choices necessary to cut your living costs. Creating and following a budget forces you to plan you expenditures in advance and look for ways to get more for less, such as shopping at discount stores or taking advantage of sales and promotions for products you need.

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