Facing A Bankruptcy? Here’s How You Can Set Things Right

By BankBazaar | March 5, 2019

Bankruptcy is not the end of the world. If you are facing an imminent financial crisis, here’s how you can keep calm, stay strong, and start working towards a better tomorrow. 

Facing A Bankruptcy? Here's How You Can Get Your Finances Back On Track

‘Rule No.1: Never lose money.

Rule No. 2: Never forget Rule No. 1.’ – Warren Buffett 

However, no one ever said anything about rule number three. What do you do if you do, in fact, lose your money? What if you lose all your savings and go bankrupt? We know the third rule, which is actually a secret. Curious to know what it is?

Well, here’s rule number 3: Keep calm and go on.

What do we mean, you ask? It’s pretty simple. If you’ve lost everything, there’s nothing you can really do to get it back instantly. So, there’s no use fretting over it or slipping into depression. However, if you keep calm, stay strong and start working towards a better tomorrow, you can slowly start accumulating your wealth all over again.

In fact, from now on, things will either stay where they are OR you can make them move towards a bright future. The choice is yours and the ball is in your court. It’s up to you to decide how you want to deal with the situation. If you are looking for a few handy tips to get your financial life back on track, here’s what you can do to plan things out.

Additional Reading: Stuck In Debt? Here’s How To Get Out Of It!

Embrace Change

The only thing that’s constant in life is change. The sooner you accept this, the better it is. Considering how things have gone downhill, you can’t have a laid-back attitude and expect things to get better on their own. At the same time, you can’t afford to shut yourself in a black hole awaiting a knock from the corridors of doom.

What you need to do is accept and embrace change. From where you stand now, it may seem like a far-fetched dream. But trust us, with persistent effort, you will be able to achieve anything that you desire.

Analyse The Situation

The first and foremost thing that you ought to do in a situation like this is analyse the situation. Try and understand what went wrong. Did you lose your savings to a serious illness, which in turn left you jobless? Or are you just a shopaholic who can’t seem to keep your spending in check? Well, whatever be the reason, the road ahead is clear. Try and figure out the sequence of events that led to your current situation. It’s only when you analyse your mistakes and accept them, will you be able to go out and look for a solution.

Additional Reading:  Why Build An Emergency Fund?

Rework Your Budget

So now, it’s time to take a hard look at your budget. Check whether you are spending less than what you are earning. This is a MUST!  Start revising your budget. Instead of renting an apartment by yourself, share it with a friend. Or just move back in with your parents for a while.

Don’t buy a new car immediately. Instead use public transport. A part-time job could help you earn some additional income. You could either freelance, tutor kids, pet-sit, dog-walk, babysit or take up any other job as long as it helps you earn some extra bucks. These little changes will help you save a lot of money.

Additional Reading: How To Become The Rockstar Of Budgeting

Set Achievable Targets

Setting goals is the first step towards turning the invisible into the visible. Yes, you need to start setting targets, which are achievable. While setting your goals, stay away from unrealistic ones because they may end up disheartening you and at this stage, you certainly don’t need that. Being realistic and patient is what will work for you in your current situation.

Additional Reading: How Does Bankruptcy Affect Your Credit Score?

Re-Establish Your Credibility 

Once your financial credibility has been hit, it will take a lot of work to get things up and running again. Try going in for a new line of credit to improve your Credit Score. As you may already know by now, it is impossible to build your financial reputation without a good Credit Score in hand. Opt-in for a secured Credit Card and use it not to fund your mega-dreams but to build your payment history.

Stay Away From Debts 

Bankruptcies can teach a thing or two about debts. While you are on the road to recovery, remember to not get greedy. Instill a sense of financial discipline into your daily routine and do not buy anything on impulse. Remind yourself that it’s only a matter of time before you can flex your financial muscles again.

Think Long-Term 

Begin to think long-term. If you can save continuously for a period of 10 years or more, you may never have to face a bankruptcy ever in your life again. As a first step, invest in a Fixed Deposit. Over time, grow your investment portfolio to include Mutual Funds and other long-term growth instruments.

Look Up A Financial Mentor

Yes, you don’t need to do all of it on your own. You can always hire a financial advisor. However, considering the current circumstances and the strict budget that you plan to follow, a financial advisor seems like too much of an expense, doesn’t it? Well, in that case, you can look up financial advice on the internet. There is a wealth of information out there. All you need to do is, take the first step.

Ready to begin?

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Category: Money Management UCN

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