The reason many people declare bankruptcy is simple — their lifestyles don’t match their finances. This doesn’t always mean it’s your fault. Maybe you have high medical bills for which you clearly couldn’t plan. Perhaps you lost your job due to a reduction in force at the company, even though you were a stellar employee.

Having a lifestyle that’s incompatible with your finances isn’t assigning blame to you for that mismatch. But, realistically speaking, if your spending doesn’t align with your take-home pay, you need to make some changes.

Starting over

Bankruptcy can be the first step toward a clean financial slate. For example, filing for Chapter 7 bankruptcy can eliminate much of your unaffordable deb and give you a fresh financial start. Reducing the amount you pay towards bills every month allows you to pay for necessities like rent and utilities. Once your most important expenses become affordable again, there’s no need to fear eviction and getting cut-off notices from the utility companies. Eliminating other debts allows you to afford what you really need.

Lifestyle changes

With that said, in order to really get your finances under control again, you will need to make some definite post-bankruptcy lifestyle changes. This will allow you to avoid running up future debt and teach you how to live within your means. You can also rebuild your credit since you’ll be able to make the necessary payments on time.

Below are a few fiscal changes you may want to consider:

  • Sell items you don’t need. Maybe it’s time to downside. Do you have old clothes that you don’t wear, a guitar you haven’t played in years or a huge collection of video games and movies? Not only does downsizing remove clutter and tidy up your living space, you can turn all of those possessions you don’t need into money that you definitely need.
  • Finding cheaper ways to enjoy the same hobbies. Maybe you love to jog and pay for a gym membership. As fun as the gym can be, you’ll save the cost of your membership fee each month if you drop it and start running outside. There are also other options, e.g., online workouts and DVDs, that don’t have recurring fees. You don’t have to give up all of your hobbies, you just need to modify the way you participate in them.
  • Buying and cooking your own food. With the amount of money you spend per week eating in restaurants and ordering take-out deliveries, you could buy all of the food you need for the month.
  • Paying with cash. Get a single credit card to let you slowly rebuild your credit. Even so, try to pay cash for almost everything. When you only have a pair of $10 bills in your wallet, you don’t spend them lightly.

If you are considering bankruptcy as a way to start your financial change this year, make sure you know exactly which legal steps to take.