A recent survey by CareerBuilder showed that over 75% of households in America are living paycheck-to-paycheck. This issue, exacerbated by overspending, is potentially dangerous especially without an emergency savings account or line of credit. The report highlights an overreaching problem for Americans that we spend everything we earn and then more through going into debt. It is for this reason that when filing for bankruptcy, every debtor is required to attend credit and debt counseling within 180 days of filing for bankruptcy and towards the completion of the bankruptcy process before your debts are discharged. It is the United States Congress’ belief that this will offer alternatives to bankruptcy, as well as, better prepare consumers to spend more responsibly and avoid having to file bankruptcy again. Part of the second portion of credit counseling courses focuses on how to manage your personal finance, part of which is avoiding overspending.
How to Stop Overspending
While there are many tips and tricks to avoid overspending, identifying your problem areas is among the first you should contemplate. If you are like most Americans, credit card debt is a huge problem and by putting them out of reach or even cutting up your cards to avoid using them for a certain period of time is advisable. Keep in mind you don’t want to proceed to cancel your lines of credit which could hurt your credit score, but by not using the cards you won’t be tempted to spend money you don’t have.
On this same note, many individuals who have racked up insurmountable sums of credit card debt have found the “cash only diet” to be extremely effective. Instead of using your debit card, take out a predetermined amount of cash you need for expenses for groceries, entertainment, gifts, and dining out for a week at a time. Once the cash is gone, so is the spending. This strategy can be very effective as you can actually track what you are spending and helps put greater thought into your purchases.
Many over-spenders don’t harness a budget to control their spending because of the misconception that it’s difficult or complicated, but with modern technology and an endless list of apps and software, it doesn’t have to be. Whether you use one of the common software-based budget keepers or prefer the good old fashion ledger, making a budget and sticking to it is a certain way to avoid overspending.
Once you have established your budget you can review it for areas where you typically overspend. If you do notice a problem area, one suggestion is to set up a separate bank account specifically for that area. With this strategy, you can transfer an allotted amount each pay period into the account and use it to spend solely in that area of expenses.
Consider Professional Debt Relief Help
Stopping overspending is not an easy task, so considering professional help is a good idea if your debt is especially bad. If your debts are growing out of control and you believe that filing for bankruptcy is your best choice, contact a Sacramento bankruptcy attorney who can refer you to debt relief agencies that are approved by the Department of Justice and that will offer a certificate of completion that you need to file for Chapter 7 or Chapter 13 bankruptcy.