Tips to Help You Avoid Bankruptcy
How does a $2.8 million starting salary sound?
It sounded pretty good to Darius Miles too! The 19-year-old basketball sensation was well on his way to NBA stardom when he was selected 3rd overall in the 2000 NBA draft – directly out of high school. Everything was looking great for Darius, a cover spot on Sports Illustrated magazine, movie appearances, and numerous endorsements (including Jordan). Miles earned nearly $62 million during his 9-year NBA career. So where is Darius Miles now?
A few months ago Miles filed for bankruptcy. According to Yahoo Sports, Darius has $460k in assets while his liabilities totaled $1.57 million. This goes to show that financial problems can happen to anyone, but bankruptcy doesn’t have to. Here are some tips to help you avoid bankruptcy.
Restructure Spending Habits
Whether you’re making $2.8 million or $20k, developing responsible spending habits is key to steering clear and avoiding bankruptcy. If you’re struggling with debt, consider finding the source of the problem by making a budget. A budget can help organize and take control of your money by tracking your expenses, locate any and all potential spending problems, and keep you within your spending limits.
You may also want to consider paying with cash rather than credit. This can help keep you more conscious of your spending as it’s much easier to lose track of spending with a card. Most importantly, learning the difference between a want and a need can help you save money on unnecessary purchases. While making scarifies may seem hard, it’s sometimes necessary to avoid bankruptcy.
Reduce Number of Credit Cards
Credit cards can be a great way to increase your purchasing power if used correctly. If not, you can end up in serious financial trouble. Rather than opening up a ton of credit accounts (which will hurt your credit score), consider keeping your number of credit cards to a minimum. We’re not saying get rid of credit cards completely. In fact, carrying a few cards can be of great help to you but too many cards can make it easier to run up debt. By reducing your number of cards, you make it easier to keep track of due dates, which will limit the amount of late fees and interest paid.
Prioritize Your Debt
If you’re starting to fall behind on payments or you’re already late, it’s important to prioritize your debt before things get worse. Not everyone has the same debt and the way you tackle debt may be different than how someone else does. We suggest you pay the down debt with the highest interest-rates. If you continue to pay the minimum on these debts, the interest will build making it harder to completely pay off. By tackling the higher rates, you save money in the long run and avoid bankruptcy down the road.
Build an Emergency Fund
We are always stressing the importance of building a solid emergency fund. You never know when a surprise can hit you and leave you looking for extra cash. Not only will an emergency fund provide you with a safety net if a problem should arise but it will keep you from relying on credit cards during this time. You should consider building an emergency fund as soon as possible. If a problem arises without one, it may be too late and you may end up digging yourself into debt.
Explore Debt Settlement
Everyone’s situation is different. While bankruptcy may have been the best option for Darius Miles, it might not be the best option for you. We believe bankruptcy should be a last resort when you’re trying to resolve your financial problems. If you’re struggling with debt and considering bankruptcy, it’s important to know that there’re other alternatives. Give Tayne Law Group a call and schedule a consultation with an attorney to see if debt settlement is a better option for you!
Avoiding bankruptcy starts with making the right financial decisions and not letting your good debt become unmanageable. Unfortunately for Darius Miles, financial literacy was not one of his many sets of skills. Learning to be financial responsible takes time and discipline but can help you avoid financial problems