While there are many financial mistakes that can be made that lead to bankruptcy, there are a few that are the most common and easiest to avoid. After reading the list it might very well seem like just common sense to avoid these pitfalls, unfortunately, all too often they are the cause of financial headaches and possible bankruptcy. The first is living without a predetermined budget: A very common and easily remedied issue.
Make a budget of what you NEED to spend weekly or monthly and stick to it. This leads to another issue which is failing to track you’re spending. Keep a financial diary; list every single purchase you make to see where your money actually goes. You would be shocked at how many people have no clue how much a coffee or two per day at a coffee chain can add up to at the end of the week. Another key issue and one that is even more of a problem in today’s financial atmosphere is the overuse of credit cards. Easy, cheap credit has allowed people to overextend themselves massively. The piper always has to be paid, whether it is tomorrow or 6 months down the road.
The fourth issue is spending without fully considering the future. Planning for tomorrow is not exactly the same as planning for your retirement or the kid’s college or university educations. As well, buying more than you require or put another way, living beyond your means is a massive issue in today’s consumer driven economy. Just because the neighbor has an Audi does not automatically mean you need an Audi too.
Consult a bankruptcy lawyer for a consultation if you have already learned of these pitfalls the hard way or adhere to the advice to avoid having to do the same.