The Leading Causes of Bankruptcy
The most important thing you can do to avoid bankruptcy is understand why a million people a year end up filing bankruptcy. 4 out of the top five reasons starts with medical expenses. This is followed by:
- Job loss
- Unexpected disaster
In some ways, all four items can be categorized as unexpected disaster. If we expanded the list just a bit more, it would include failure to have a proper financial plan. By now, the unexpected is so common, we ought to be expecting it. When the vicissitudes of life catch us completely off guard, bankruptcy is often the result.
Learn to Properly Use Credit
I separated poor or excessive use of credit from the rest as it is the only one of the top five that is self-inflicted. By now, it should be clear that using credit appropriately is important for a successful financial life.
Many people advise those struggling with debt to cut up the credit cards. Other financial advisors say just the opposite. Store credit cards such as those from Walmart can actually prove beneficial in the right hands.
Click here for more information on the advantages of properly using the Walmart store credit card. Today we have many personal financial tools at our disposal, if we use them wisely they can be very helpful, if you use them foolishly we will pay.
Live Below Your Means
One of the biggest mistakes people make is to live up to their means. They commit to all kinds of services they can afford at the time. But because Job instability is such a real and present reality, the loss of even a little bit of income suddenly leaves us living above our means. We need to adjust our lifestyle expectations to something lower than what we think we can afford.
Even applying this advice to the best of your ability, you still might have to file for bankruptcy. It is important to know that bankruptcy is not the end of the line. There are those who can help you recover. Bankruptcy is not a punishment, but a solution. It is the ultimate second chance.
Bankruptcy is not uncommon even for those who make fortunes every year: famous people who have fallen into it. If you fall into bankruptcy the important thing is to change your habits and practices to take advantage of your second financial chance.