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What to do to prevent bankruptcy

If you're looking for a way to prevent bankruptcy, then this article is for you. You'll learn how to stop spending more than you earn, look for ways to increase your...


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Jacob Braun

2 years ago | 4 min read

If you're looking for a way top revent bankruptcy, then this article is for you. You'll learn how to stop spending more than you earn, look for ways to increase your income, create a budget app and payment plan so that you can see what's coming in and going out of your bank account each month. We'll also talk about creating an emergency fund and backup plan just in case things get really bad. And maybe most importantly: don't take on any new debt until you've paid off everything else!

Stop spending more than you earn

One of the most important things you can do to avoid bankruptcy is to stop spending more than you earn. You may think that spending your way out of debt will work, but it won't. Even if you can make all your payments for a few months and get ahead on them, eventually the interest will catch up with you and push you into bankruptcy again.

In order to stop spending more than what you earn, there are a few things that need to happen:

  • Cut back on your spending wherever possible (this could include downsizing or selling stuff)
  • Find ways to make more money (start a side hustle)

Look for ways to increase your income

One of the best ways to reduce the risk of bankruptcy is to maximise your revenue streams. This can be done by increasing your sales volume and/or improving your profit margin.

You can increase your revenue by selling more products, services or both. For example, if you own a restaurant, you could increase your offerings by adding more menu items (more products) or offering different types of cuisine (a different service). Or you could do both!

If you own a small business, it's important to provide exceptional service so that customers come back again and again. That way, even if they don't spend as much money each time they visit, their repeated visits will add up over time.

Use a budget app to track your income and expenses

One of the best ways to prevent bankruptcy is to use an app that tracks your income and expenses. A good budgeting app will help you stay on track with your budget, so it's important to find one that suits your needs. For example, some apps are designed for people who want to save money or pay down debt; others focus on helping users meet a savings goal or retire early. If you're struggling with debt or not saving enough money, look for an app that helps users track their spending habits in detail—and offers advice on how they can cut back or increase their savings accordingly.

Be accountable to someone else

You need a coach or mentor who can be honest with you, hold you accountable to your goals, and help keep you on track. This person should have experience in the area of money management and bankruptcy. They should also have gone through the process themselves and know what it’s like to be in debt. If they are not willing to admit their mistakes publicly, then they might not be willing to be completely honest with you either.

Hire a tax accountant

If you're struggling with debt, one of the first things you should do is look into hiring a certified tax accountant in Sydney. A tax accountant can help you sort out your finances and determine what kind of taxes you'll need to pay in order to avoid bankruptcy. If you're able to make sure your taxes are paid on time and in full, it can help prevent creditors from taking any action against you.

Create a payment plan

If you have debt, the most important thing to do is create a payment plan. Try to pay off your debts as soon as possible! If this isn't possible, try to make the minimum payments on all of your credit card sand loans. However, if you have enough money left after paying these bills at least once each month then consider putting that money into savings or investments instead of using it to pay off debt.

You can set up a payment plan with your creditors directly by calling them or sending them an email asking how much they charge in interest every year (the annual percentage rate).

Create an emergency fund

An emergency fund is a cash reserve that you can use to cover unexpected expenses, such as car repairs, medical bills and other costs. You might already have an emergency fund if you have money set aside for these types of expenses. To create one, put away money in a savings account every month so you don't have to worry about paying for emergencies when they happen.

NOTE: If you don't know how much money should go into your emergency fund, start by saving what you can afford—even if it's just $50 per month at first—and work up from there as your finances improve.

Pay off high interest debt

If you have credit card debt that's charging 20% or more in interest, pay it off as soon as possible. If this is impossible due to a lack of funds, consider switching to a card with lower rates and transferring balances from other cards. If possible, also ask if they offer 0% balance transfer options (which usually come with a fee).

There are some simple steps you can take to avoid bankruptcy, and even if you have already been through the process, there are steps you should take even then. Do not stay in debt for too long; learn from your mistakes and try to get ahead of the game. Also, understand that financial freedom is something that can be achieved by anyone who is willing to work for it.

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