Take care now to preclude bankruptcy later

Many people in Hartford, Connecticut, are prospering, able to buy the mansions, land and other material pleasantries that they want. Others, however, find that their money train must have taken a wrong turn and find themselves potentially needing to file for┬ápersonal bankruptcy. Nationwide, hundreds of thousands of people do. Others who haven’t hit that point yet would do well to understand what can lead to it.

Naturally, one thing is job loss. If you don’t have an emergency fund that has enough cash in it to cover all of your living expenses for six to 12 months, the loss of a job could damage your finances enough to put you face to face with bankruptcy. Therefore, if your job is less than 100 percent secure, cut unnecessary expenses and start saving everything you can until you have that six- to 12-month reserve fund. Not making that happen is a bigger risk than anyone should be willing to take.

In a related challenge, which is another good reason to save as much money as you can every month, is that even if you keep your job, you may find yourself with less work hours and thus with less work income. This happens all the time, when companies find themselves with less revenue and immediately look at what labor hours they can cut. Employees who do great work can make a case for keeping all of their hours, at the expense of employees who don’t do great work, but often cuts hit everybody so be prepared for them.

Bankruptcy also becomes an issue for those who run up debts. Some, like those associated with unexpected medical expenses, may be unavoidable. Others, however, like credit card bills, are very avoidable, so consider using a debit card instead and only spending what you actually have, with even that being very carefully budgeted.