***One of the most common decisions after bankruptcy is to use cash instead of credit. This is one of the most damaging decisions you can make when you're attempting to restore financial strength.
The decision to avoid credit will result in you getting the highest interest rates and poorest terms when you need to purchase or refinance a home or restore other credit. This single mistake can make over a thousand dollars per month difference in your monthly house payments and more.
Avoiding credit will keep your credit score low. A low credit score will not only increase interest rates on necessary credit, but will increase your insurance costs on home and auto. Nearly all the insurance companies now use an individual's credit score as an important factor in determining your rate (insurance risk) and the company's willingness to issue insurance to you.
A good credit score (FICO) is becoming more important with every passing year. After your bankruptcy, you need to open new credit accounts as soon as possible.
- Purchase a secured card if necessary in order to re-establish credit quickly. This may be your ONLY route to returning to a normal financial life quickly and to the freedom to purchase homes and insurances without severe penalties. It may also be your BEST route to opening the door to many forms of beginning investing.
***Another very common mistake made post-bankruptcy is to continue making decisions just as you did before the bankruptcy or financial crisis, except in a scaled down version. The most common misunderstanding about bankruptcy is that it is the result of spending too much money. Bankruptcy is the result of a PATTERN of money management, NOT spending too much money.
I strongly recommend the following reading list to begin to educate yourself about money management patterns. All of these books can be found at you local library or bookstore and are very easy to read. Many of their titles make them sound like books for people trying to get rich but they're primarily about how we keep ourselves down financially.
Rich Dad Poor Dad by Robert Kiyosaki
The Millionaire Next Door by Thomas J. Stanley & William D. Danko
The Instant Millionaire by Mark Fisher
Cash Flow Quadrant by Robert Kiyosaki
Secrets of The Millionaire Mind by T. Harv Eker
***After bankruptcy or financial crisis people tend to act from fear. Post bankruptcy is marked by the raw, exposed pain of disaster, failure, inadequacy and fear of rejection.
We don't want to have to go through it all again, and so we make "avoidance decisions" rather than constructive decisions. We also spend a lot of time in the emotional mud hole of "why me?"
The speed of your recovery from bankruptcy or financial disaster is directly related to how quickly you
Solving credit and financial problems begins with finding Solutions.
