Although government officials claim the economy has recovered, many individuals continue to struggle to pay for their basic needs of food, clothing, and shelter. Others have had to rely on aggressive borrowing strategies, such as payday loans or high interest credit cards. Recently on our forum a user asked, “I have a job, but I am living paycheck to pay check. I am depressed and my debt obligations are growing. What can I do to improve my financial situation?”
Increasing your income and improve your financial situation
Financial solvency is not difficult to understand. If you have more income and save more money than you spend, you will have more assets than liabilities and will be financially solvent. So with this in mind there is only one consideration to improve your financial situation: your income needs to be higher than your liabilities.
But what steps do you need to take to improve your financial situation? Improving your financial situation could be as simple as getting a second job and saving your extra wages. It could mean going back to school and developing new technical skills which allows you to move into a higher paying job. It also could mean you think of ways to generate additional income such as selling assets.
However you decide to increase your income the bottom line is it will take work. It could mean working two jobs at one time or spending hours studying after you have worked all day. It could mean seeing your family less or spending less time with your friends. It will take sacrifice.
Decreasing your expenses and improving your financial situation
Another option to improve your financial situation, however, is by cutting your expenses. This can be less difficult than getting a second job or going back to school, but depending on your current spending levels, it could also be very difficult.
For example, if you currently live on a very restrictive budget you may have nothing left to cut. Many of us, however, generally can cut $100-200 dollars from our budgets each month and improve our financial situation simply by making some small changes.
Let’s look at some general expenses that might be cut from the average consumer’s budget:
Gym Membership $60 Cell Phone $100 Coffee $30 Netflix $9 Cable $100 Eating out $100 These listed expenses are just some of the basics, and we didn’t even start really digging. Imagine if you stopped shopping for clothes for several months, completely eliminated eating out, going to the movies, playing golf, and getting your nails done? Just cutting the above expenses generates an additional $400 each month; money which can be used to pay down your credit card debts and begin your emergency savings.
Filing for bankruptcy protection and improving your financial situation
Other debtors have asked if filing bankruptcy is the right decision for them. Considerations must be made before filing bankruptcy. For example, would your debt be discharged? Do you qualify for Chapter 7 bankruptcy? Do you understand how long the bankruptcy filing can impact your credit score and remain on your credit report? Do you really have enough debt to file bankruptcy? Could you accomplish the same thing with a better budget and better financial decisions?
Without understanding and answering all of these questions it is not a good idea to file for bankruptcy. The first step to improve your financial situation is to review your budget, increase your income, and decrease your expenses.
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