How to stay out of debt and avoid Bankruptcy

Year 2011 was a great year for my family. Finally, we managed to stay out of debt! How? Here's the highlight of our family strategy:

1. Creating a realistic monthly budget. In this, list all income and expenses, and once created stick to the budget.

2.  Using cash or debit card. Studies have found that people spend around 15 percent more on purchases paid with a credit card. This is one of the reasons why I'm not planning on getting a credit card for the family.

3. Setting aside savings. We fall short on this area but at least we're trying and starting by setting up an automatic transfer or deduction from our paycheck into a saving account. If you do not realize it is gone, you will not second-guess the practice.

4. Making lunch or dinner at home instead of "grabbing a quick bite." Saving at least $15 per week by cutting out a restaurant meal or two add up to $780 annually.

5. Stopping or lessening the expensive little indulgences. No more expensive coffee, premium cable, daily soft drinks, weekly clothes shopping at Puer Thai and no more prepackaged meals for dinners.

6. Buying from our favorite clothes line on sale. The close-out aisles and bargain bins are our friends for this year.

We'll continue doing the same strategy for another debt-free year. We're vigilant not to TAKE ON TOO MUCH DEBT. Taking on more debt than we can reasonably handle is one of the major causes of bankruptcy. Often times people with families spent money based upon their belief that the expenses are justified and needed by the family. They will charge credit cards or take equity out of their home without having a reasonable plan to repay those debts. Depending on your circumstances, you may not need to declare Bankruptcy if you can learn to live within your means.

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