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Give This A Go Before You File For Bankruptcy!

Jun 25, 2024 | Bankruptcy

You might have heard the expression, “Desperate times call for desperate measures”. If your financial situation is on the brink of bankruptcy, then these are certainly desperate times. Or at least, you might think they are.

You might be looking at your situation and thinking that there is no way to avoid bankruptcy—there’s not enough money to pay the bills, and creditors are calling day and night, threatening to take action when they don’t receive payment. You might think that bankruptcy is your best choice for getting your debt under control, and you might be right.

But bankruptcy, although a powerful debt relief tool that has many hidden advantages, is best for most people to use after they have exhausted the alternatives. At the very least, it can be super comforting to know that you tried to do everything you could to “fix” your financial mess before you filed.

So let’s look at some tried and true practical income-generation, cost-cutting, debt reduction, and other “get-out-of-debt-free” card strategies that you may not have tried or even thought of before filing a bankruptcy petition.

Practical Strategies For Getting Out Of Debt

Below are some of the most common strategies people have used to get away from creditors, protect themselves against bankruptcy, and live a life free from massive debt. The equation for managing debt is made up of two parts: income and expenses. So let’s divide these strategies into two categories: ideas to increase your income and ideas to reduce your expenses.

Ways To Raise Revenue And Increase Income

1. Start a side hustle, do freelance work, or take on a part-time job.

These options can provide additional streams of revenue and help you reach your financial goals. With a bit of creativity and determination, you can find ways to increase your earnings while pursuing your passions. Jobs like Uber, Lyft, and DoorDash are great ways to earn extra money on the side and provide the flexibility you need to work around your schedule. Or perhaps you have a particular skill or talent that you can market that would be mutually beneficial to those whom you’re providing a service to. A little here, and a little there, can really add up over time, and might just be the boost you need to get out of debt.

2. Rent out a room in your home or on your property on platforms like AirBnB.

We recognize this option is not for everyone, either because you don’t have the space or because you don’t want to have strangers in your home. However, if you have the space, renting out a room in your home is an excellent way to make some extra money on the side with very little effort or investment on your part. You would have to evaluate your particular situation and determine if this is a viable option for you.

3. Explore passive income streams like stock dividends, or real estate.

Passive income revenue, such as investing in stock dividends or venturing into the world of real estate, can provide you with a stable source of income and the potential for long-term growth. Whether you prefer the volatility of stocks or the tangible nature of property, both avenues offer unique opportunities to build wealth and secure your financial future.

4. Rent out unused storage space, or equipment.

Again, depending on your particular circumstances, this may or may not be feasible. But if you have unused space, extra property, or equipment you don’t use, you could earn some extra cash by renting it out. Someone may need some extra room to park their boat or RV and would be willing to pay you to do so.

5. Sell unwanted items on online platforms like eBay, Craigslist, or Facebook Marketplace

It is amazing how many people out there are willing to buy items that you are not using. As they say, one man’s junk is another man’s treasure. So just because you don’t need or want something, doesn’t mean someone else won’t be willing to pay you for it.

Ways To Minimize Debt And Lower Spending

1. Create a budget and track your expenses to identify areas where you can save. Putting a budget in place will help you avoid overspending and give you a better idea of where you can make changes to maximize your savings. Making use of a budgeting app can simplify the task of keeping track of your spending and offer insightful information about your spending habits.

2. Stop eating out and prepare your own meals at home
One effective way to save money is by cutting down on unnecessary expenses, such as eating out at restaurants. While dining out can be enjoyable and convenient, it can also take a toll on our wallets. By preparing meals at home more often, we not only save money but also have the opportunity to explore our culinary skills, experiment with new recipes, and have control over the ingredients we use, promoting healthier eating habits.

Furthermore, shopping for food at discount grocery stores, e.g., Aldi, is a good way to save money. They often have cheaper products for the same quality food you get in higher-end grocery stores.

3. Get rid of cable TV and switch to streaming services

Streaming services like Netflix, Hulu, and Amazon Prime Video offer a wide range of TV shows and movies that can serve as a cable alternative. Consider investing in a high-definition antenna to enjoy a wide range of free programs that are available over the air. This allows individuals without cable to access local stations. Internet service providers offer streaming bundles that are more affordable for those without cable TV. These bundles include a variety of channels and on-demand entertainment options.

4. Negotiate lower interest rates on credit cards, or consolidate debt into one low-interest loan.

Negotiating lower interest rates on credit cards is a smart financial move that can save you money in the long run. By reaching out to your credit card companies and explaining your situation, you may be able to secure a reduced rate. Another option to consider is consolidating your debt into one low-interest loan. This can simplify your payments and potentially lower your overall interest rate, making it easier to pay off your debt faster.

5. Explore refinancing options for loans to lower monthly payments or interest rates.

At the current interest rates, it isn’t likely that you will be able to refinance a loan and get a lower interest rate than you currently have. However, the market is ever-changing, and depending on how the economy is doing, your interest rate may go down. If you have a mortgage, and interest rates have gone down, refinancing may be an option. Refinancing a mortgage can lower your monthly payments, giving you more money to put toward paying off other debt.

6. Downsize your home or car to reduce monthly expenses.

Perhaps part of the reason you are in debt is that you are simply living beyond your means. If you can afford to, it may be a good idea to reduce your housing expenses by downsizing to a smaller house. You may also want to consider selling your car and buying a cheaper one with lower payments, or no payments. If, like so many people these days, you work remotely from home, you may not need a car at all. That would also help reduce gas and insurance costs. When you add up the costs, you may discover that using a rideshare service from time to time is actually cheaper than owning a car.

7. Cancel unused or underused memberships or subscriptions.

A membership here, or a subscription there can really add up over time. Individually, they may seem insignificant, but collectively, they can really put a dent in your finances, without you even realizing it. Cancel subscriptions to magazines you no longer read, or that gym membership you haven’t used since the end of January.

8. Reduce energy consumption by adjusting the thermostat or turning off lights.
Try to be more intentional about turning off the lights when you leave a room, or adjusting the thermostat to a more energy-efficient temperature, especially during the summer months, or when you leave the house.

9. Shop lower rates for car insurance and home insurance, or change your policy limits to lower premiums.

When was the last time you took a closer look at your car and home insurance policies? It’s worth considering, as there may be an opportunity to save significantly on your monthly expenses. By exploring alternative providers that offer lower rates, or even adjusting your coverage limits to better suit your budget, you could potentially save hundreds of dollars each month. Take a proactive approach to reviewing your policies and ensuring you’re getting the best value for your money.

10. Do DIY projects and repairs instead of hiring professionals to save on labor costs.

What’s that? You’re not a handyman? No problem. Luckily, thanks to the widespread availability of YouTube, you can acquire the skills to accomplish nearly anything on your own. There is no DIY project that you cannot accomplish without the assistance of YouTube. Installing a new faucet, replacing the toilet, laying down new flooring, and even fixing your garage door are all projects that you can tackle without the help of a professional. In fact, after a while, people may be looking to hire you to help them out with their own DIY projects!

Consider Ted Machi & Associates, P.C., As Your Choice If You Are Considering Bankruptcy As an Option

It is unlikely that you will be able to do all of these, and perhaps you have already tried most of them, but whatever the case, these solutions may not make a large enough dent in your financial situation. If, at the end of the day, after weighing the pros and cons, your debt still remains, then bankruptcy may be your best option. We can help you arrive at the decision that’s right for you and your family, and, if bankruptcy is the way to go, we can provide information and tools to get your life back on track.

All is not lost, and we can guide you through the experience of filing for bankruptcy. Bankruptcy can be a viable solution for individuals facing financial difficulties, and our team is here to help you take your next steps. Give Ted Machi & Associates a call today for a free, no-obligation evaluation.

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