Bankruptcy As Emergency Planning

Reading Maurie Blackman, The Motley Fool, on

Business Insider on the Yahoo site,

Middle-class Americans are feeling a lot of financial stress

and thinking about what to post on today.

And how many times I write about having a budget,

tracking how much you spend and earn.

And it occurred to me that we plan for bad stuff that we hope does not happen.

Emergency Planning

If you have kids, you have arranged where to meet if you have to evacuate if there is a fire, right?

In Michigan, which room to get to if there is a tornado warning.

Most folks don’t think about bankruptcy until the car is repossessed, the garnishments hit the paycheck, the foreclosure sale notice comes, and/or constant harassing collection calls.

Why not think about your finances before any emergency?

In a newly released MassMutual study, 48% of Americans aged 25 to 65 with an annual household income of $35,000 to $150,000 said they worry about money at least once a week.

Budget

OK, do as I say, not as I do.  My wife and I are both self-employed, so never sure how much income there will be.

But you can control your expenses.  You can save to buy something, rather than finance it.

You can stop borrowing money, but, by then it is too late.

Client asked me today about taking another student loan to take another course to kick the can down the road by extending the time when student loan repayments are due.

He is already a bankruptcy client.

Anyway, figure out your income and living expenses a year out, before  you sign up for new debt, whether for a vehicle or whatever.

We all should be saving for retirement as well, if not for college for kids.

So what are middle earners so worried about? Being unprepared for retirement made the list, as did healthcare costs and overspending in the near term. Their top financial fears, however, center around financial emergencies, such as encountering a major unplanned expense or falling ill and being unable to work.

The advice is old, and I have given it before, but it bears repeating.

Let’s start with near-term savings. Having three to six months’ worth of living expenses in the bank will protect you from immediate unforeseen circumstances, whether it’s a layoff at work or a car engine that suddenly goes kaput.

Now, if you cannot save anything, you are already spending too much money.  Cut your expenses; don’t worry about keeping up with the Joneses.  They are probably already broke.

Summary
Article Name
Bankruptcy As Emergency Planning
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People making up to 150k per year are worried about finances. Are you? No one wants to file bankruptcy, but the best way to avoid bankruptcy is to have a financial plan.
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Digiprove sealCopyright secured by Digiprove © 2017 Kurt O'Keefe
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