Tuesday, 07 July 2015 16:00

Bankruptcy and Budgeting

Written by  Dave Ramsey
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Q. What are the long-term effects of declaring bankruptcy?

A. One of the biggest aftershocks of filing bankruptcy is that it stays on your credit report for years afterward. A Chapter 7 filing, which wipes out everything and gives you a clean slate, stays on your report for 10 years. Chapter 13, which is a repayments plan, and Chapter 11, another type of large bankruptcy or business bankruptcy, both stay on your credit bureau report for seven years.

 

Another big problem is that it can follow you around when it comes to applications or when you apply for different types of licenses. Many of these ask if you’ve ever filed bankruptcy. It doesn’t ask if it’s still on your credit report; it will ask if you’ve ever filed bankruptcy. If you have, you’ll have instances for the rest of your life when you have to admit it and explain it all over again. So, it’s an emotional scar that follows you around for a long, long time.

 

Too many bankruptcy filers never really recover from their financial distress because they never learn new and better ways to manage their money. That’s why I recommend people do everything they can to avoid bankruptcy. It’s not an easy do-over; it’s a last-resort kind of thing. And in the vast majority of situations it’s just not necessary.

 

 

 

Q. I have a question about budgeting. I give myself and my husband $150 a month each for blow money to be used on whatever we want. I’m upset because he spends all his eating out, then he buys other things he wants that he has no money for. Am I being too stingy?

 

 

A. I think you guys are handling your money poorly. You’re acting like his mother instead of his wife, and he’s acting like a little boy instead of a man. You don’t want to give your husband an allowance and then not be happy when he spends money “he didn’t have” because he went over what you dictated to him. That’s a bad budget process.

 

The budget process, if you’re the nerd in the family, should start with you writing it all out. Then he sits down with you, has an equal say in the decisions and you two okay it together. He needs to understand that this is you asking him to man-up and be part of the decision-making process, so that you can both be in agreement as to what’s best for the family. In one sense, you may not like it at first, because right now you’ve got control of things. But in another sense, I’ll bet you’re pretty tired of carrying the weight of all the financial decision making and being the only adult in the household.

 

He doesn’t even have to work on all that much. I want you to lay it out, but I expect him to sit down and go over it all with you. You’re not asking him to be an accountant with a pocket protector, but you have every right to expect him to be in on the decisions that are made about your family and your finances!

Last modified on Monday, 13 July 2015 16:03
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