At some point in most people’s lives they will fall behind on bills for a month or two and then pick themselves back up. Other people are not so lucky. They scrape by as best as they can, but still fall further behind. Their debts may seem like a revolving door where they think they are finally making forward progress, only to find out that they are further behind or back where they started from. It is something that is hard to get out of, once you sink below a certain point in that bottomless pit. However, with a little planning and a lot of effort, you can eventually rise above the debt. Are you ready to discover what it takes and how to go about bouncing back from debt?

Start Small

Regardless of what set you back, be it an illness that you could not easily work through, a divorce that cost more than you had, or simply losing your job and being unable to find a new one quickly, you can begin recovering from it. The difficult part is deciding which steps to take and how to take them.

There is some truth to the idea that in seven years your credit will reset. However, this is based on seven years from when you go delinquent. If you fall behind over a period of a few years, you need to take into consideration the last bill date that you went behind on.

If you have a desire to rebuild your credit you should ask yourself how much time you have. If you are 5+ years delinquent, do you have the money or time to rebuild? Perhaps you should continue to wait and let the seven year window expire and then start over from scratch. If you are nowhere near the five year mark and you want to get ahead again, you should start recovering yourself now, but first, you will need to decide which route you want to go with it. You really only have three options. You can pay it off, settle it, or file bankruptcy on it.

What Next?

After you have satisfied your debt collectors most people are able to start rebuilding their life in about 2 years, but it depends on the option that you have chosen. If you file bankruptcy, it can usually satisfy the debt collection agencies in about three to five years. This means in roughly five to seven years, you will be able to clear your name and rebuild. If you choose to file a chapter 7 bankruptcy, you can rebuild in as little as two and a half years. The same can be said of a simultaneous debt settlement.

There are several types of bankruptcy to choose from, but in general the best way to clear your good name is going to be to simply pay off the money that you owe. That will be the only way to have your credit say that it is paid in full. The downside is, if you are broke, the inability to pay it off is why you are in this situation. To go with the simultaneous debt settlements, you will need about half of the payoff amount.

If you do choose to pay off and continue paying as much per month as possible, cut up the cards you have. After that, include friends and family and have them help you not spend as much on needless items. As a final thing, teach yourself to budget better so you can save up to put more toward your bills.

Now to Rebuild

Regardless of which method you choose to go with, the first step toward rebuilding your finances is going to be budgeting and saving what you can. This will ensure that in the future, you will be able to have some padding against unexpected expenses.

You will need to start paying your bills, all of them on time after suffering a setback. It is the fastest way to get your name back high up on the credit scale. You will also want to keep a close watch on your credit score to see if you are making headway.

When bouncing back from debt, one of the main things to keep in mind, is to not let yourself end up in a bad situation again if at all possible. If you had five cards maxed out from stuff you didn’t really need and couldn’t afford, why rebuild by having five more? This is where knowing your own weaknesses can come in handy. If you get a card, use it for emergencies. Save the “wanted items” for when you have a little extra money in the bank and are able to buy them outright.

Think back to the days before debit cards and computers. It was probably a lot easier to keep a close eye on your finances. They were the days when every time you wrote a check and took money out of your account, there was a record of the transaction. Either you would write it out or you would have check duplicates. Now, it is not so easy to keep track of what your bank account is doing. It is too easy to go to town and swipe your card. Some people keep the receipts, but not all and let’s face it, no one will remember what they spent at each place they visit. Add in the internet’s online purchasing options and it does not take long until you are over budget and perhaps overdrawn.

It Is So Easy to Spend Big

Now days, swiping a card is best for most people. Checks are slow and outdated. Some banks do not even deal with putting checks on an account. On computers, you simply type in a card number one time and then visit that website all you want to for future purchases. There is also the option to auto pay out for things, you can purchase with a smart phone, and it is all easy access to cash flow whether you have enough to afford it or not.

If you have two people swiping a card on the same bank account, the situation becomes even more delicate. The wife or the husband may forget to mention that they ordered something that cost them $100 and you may order something equally expensive. It is just a button click or a swipe away and wah-la, you have spent $200. What happens if you did not have that much? Both of you may have considered what was available, but no one would know that the other had spent that much already. Now, you are in the hole and sweating.

Would it have happened this way, if you had a better way to keep track of everything? Perhaps, but it would be less likely if you were equipped with an easier way of keeping track.

Is There an Easier Way to Track Your Budget?

There are a lot of new apps on the market that can help you keep a closer watch on your finances. If you are looking for a truly simple one and you have an income that is consistent from one month to the next, you may consider Level Money. It is available as an iPhone app or Androids. It does all the work for you and automatically subtracts the bills you have to pay each month. It allots an amount for savings as well. From there, it will tell you how much you have left and how much you can spend per week. The great thing is, you put in all credit, debit, and bank accounts you have. When you or your partner spend, it will adjust without you ever having to think about it again. If you venture to the store for a new dress and overspend, it will adjust the rest of your month’s spending limit to accommodate.

Envelopes is another app that works the same way. However, you do have to decide how much you spend per week or month on food, bills, and other important items. Each time you spend money for groceries, the amount is subtracted so that you know what you can spend on it the next time. All categories are separate envelopes. If you overspend in one area, you must pull out of the other envelopes to make it or do without. Perhaps pull it out of the “fun” envelope.

What Is Your Limit?

If these do not sound like apps you want to use, look around. There are plenty more options available because everyone knows that Budgeting is not an easy task. It is very hard to keep track of everything. Having tools that can show you where you spend and where you save could be the best thing that you have at your fingertips since the invention of a debit card. Use it wisely and take advantage of an easier way to track your budget.

Income taxes are something that most people have a love/hate relationship with. If you are lucky, you will get a tax return that enables you to go out and purchase the items that you need and pay off debts that you may need to catch up on. If you are unlucky, you could end up paying the government for making too much and not paying in enough. In other cases, you may end up audited and have a longer wait for your return or break even and really not gain or lose anything. It’s a hassle that some do not want to deal with, so they file through an accountant or some tax preparation company. Others, brave the hassle and file for themselves in the hopes of saving money on tax prep and gain more on their return. Which is best for you? Should you file your own income taxes next year? 

The Good and Bad of Filing with Help

An accountant’s job is to play with numbers. They deal with taxes and other stuff all year long. By using a tax service, often the tax preparer has the ability to file taxes from January through April, and then they may also have another source of income that they do between tax seasons. With either of these options, they know the various loopholes that could bring you more cash on your return. They are also less likely to get audited.

The downside to using this service is that it is sometimes costly. Some can cost you a few hundred dollars just to get one return filed. They also tend to file your taxes as they are able to get around to it. You take your spot in line behind all the people who visited before you. The longer it takes for them to file for you, the longer you have to wait for your return, and who wants to do without their money any longer than necessary?

Pros and Cons of Self Filing

There are a few programs out there that can help you file your own tax return. They are a great option for anyone who has a simple return. By filing yourself, you will not have to pay fees to anyone else and when you are ready to file, you simply sit down and get it done.

However, if you have a complicated return to file, you could end up missing something that would give you more money on your return. If you happen to miss an area that needs your attention, you could also open yourself up to an audit or losing money. Both of these situations would be very bad if you are hoping for a larger profit.

When You Should Choose Hiring Someone

According to many people, huge life changes may mean your taxes should be filed with a little extra help. This could be a new baby, a new spouse, or moving to a different state. You may also want to consider having help the first time you file after switching from full time employee to self-employment. These will require different forms and different areas to be filled out if you want to get back all that you deserve.

As to whether you should file your own income taxes next year or not, no one can truly answer that but you. You should consider your options. If you do try to file your own taxes at home and get stumped by it, it is never too late to cancel out and ask for the help of a professional.

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