In preparation for filing bankruptcy, debt counseling is the first step. The counseling consists of listening to 9 modules on how to better manage finances. I will attempt to summarize what I learned from each of the modules.
Module 1: Dos and Donts of Financial Planning and Tips
1)Review current financial situation
2)Life happens and it is difficult to predict changes in health and the impact this may have on your finances
3)It is difficult to anticipate lifestyle changes
4)Make the best financial decisions
5)Do not have any financial regrets
6)Own real estate or Invest
7)Money Management
Module 2: Create a Spending Plan not Budget
1)Review Past, Present and Future Debt
2)Evaluate what is Essentials = needs vs. Desirables = Wants
3)Deposit 100% of paycheck
4)Allocate envelopes for expeditures with exact cash
5)Classify according to the budget amount/proper amount
6)Enter each in ledger to monitor spending
Module 3:Notebook Method
1)Each Month notate each spend
2)Review at end of month
3)Chart progress of achieving goals
4)Surplus = deposit into savings=carry forward
Module 5 and Module 6 were a series of questions to evaluate my individual debt
Module 7: Assets vs. Liabilities
1) Net Worth = Assets – Liabilities
2) Create a list of assets, car, real estate, 401K/pension, cash value of insurance policy
3)Liabilities= Unsecured/Secured debt, healthcare expenses, tuition, student loans
4)Review Monthly Income based on net income determine monthly expenses
This part of the module was a bleak picture of how heavy my liabilities were based on how much I owed between past, present and future debt. A foreclosed house that is underwater is not an option loan modification!
5)Balance Checkbook
6)Monthly Budget, determine recurring expenses, prioritizing needs vs. wants.
7)Deposit regular payment into a interest bearing account
8)Pay Credit bills on time
9)Maintain checking account
10)Record every penny spent , eliminate wants
Suggestions on Getting Ahead of Debt:
1)Look for ways to make additional income, new job with higher wages, part-time work
2)Enjoy free fun
3)Create an Emergency Fund which is at least 6 months of salary, this will create a cash reserve in the event there is an emergency
Module 9:
1)Restructuring
2)Bankruptcy