Millions of people found themselves blind-sided by the economic problems that hit the nation in 2008. While many are still reeling and face serious financial challenges, the picture has improved for others.
The American Bankruptcy Institute announced welcome news that at least one economic scorecard shows substantial improvement. Their statistics indicate the filing of 1.18 million bankruptcies in 2016-17. While still difficult for those million plus consumers, the total was nearly 200,000, or a whopping 14 percent, lower than that reported in 2015.
The Executive Director of ABU,Samuel J. Gerdano, attributed the decline to low interest rates, reduced consumer spending and continued deleveraging by households.
Representatives of New Jersey Savings Bank expressed pleasure at the news. At the same time, a respected New Jersey bankruptcy attorney was quick to point out to the projection that a million people will file bankruptcy in 2012. He shared 5 effective tips he calls the 5 Cs to help in avoiding that eventuality. These include:
Create a cash reserve.
There is a simple financial truth worth accepting and applying to your financial plan. That is the reality that cash is king. Without an emergency fund, the day-to-day struggle overwhelms. You don’t have to start big; simply taking the change from every purchase is a start. Knowing you can buy groceries or keep the lights on regardless of what happens is an important morale factor. Cash is also an effective negotiating tool when working with lenders.
Control monthly costs.
Even in good times, guarding against budget creep is important to financial security. There are two items here. First, cut any unnecessary monthly recurring expenses. You’ll be surprised by how the little items turn into major totals very quickly. The second step is to sell anything you can do without. If you eliminate payments and add cash to your reserve, that is a double bonus.
Communication is essential.
In all but the rarest cases, you gain a lot by talking with creditors and lenders. They want their money, but they also know that times are tough. Most lenders today already have strategies in place to deal with customers that are in a bind. Often, all you have to call and ask.
Credit Counseling works.
If things get to where you simply don’t know what to do, there are very good credit counseling services that will take a load off. They are very effective at dealing with creditors, and experienced at gaining concessions such as reduced interest and payments.
Create income and cash.
Just a little extra cash income can stop a lot of leaks in your financial boat. Giving up a little freedom to some overtime or a second job is often good therapy. It also is another way to show good faith to your creditors.
Take these five steps and you will have a fighting chance to avoid being one of those million projected to file bankruptcy this year.