Between March and June 2009, 381,000 people filed for some form of bankruptcy protection in the United States. 381,000. Let that number sink in. Over a third of a million people. And that was a year ago, the last hard data I could find on the internet – where do you think we’re at now, number-wise?
You’re reading Almost Frugal, so forgive me for making some assumptions about you. Are you the frugalite/frugalista looking for new ideas and a friendly community to share your victories and failures? Or are you the flailing and sinking consumer reaching for a life preserver?
A few years ago, I was the desperate debtor, splashing around, looking frantically in the choppy waters around me for some help. Somehow I stumbled across Kelly and have been following her since. Unfortunately, the life preserver she and other frugal bloggers graciously threw wasn’t strong enough to prevent me from sinking. No fault of theirs, their life preservers just weren’t built for debt of my size.
But the US Government had the mother of all flotation devices for me! Complete absolution of all my debts. All for the low, low price of $1900.
That’s a story for another day. Today I’d like to tell you how to NOT let your story become mine.
- Avoid debt completely. Yes, completely. No mortgage, no car payment, no credit card. No cell phone or cable/satellite tv or anything else that comes with a contract. Of course, be prepared to pay more for car insurance and have to put down a deposit for your utilities, and maybe miss that job you wanted so badly because they screen applicants by credit report. But hey, small price to pay, right?
- Don’t ever get sick. Catastrophic (and not-so-catastrophic) medical bills prompt 60% of bankruptcies. So keep yourself healthy and pray none of those free radicals ever decide to mutate into something sinister.
Yes, that was a little sarcastic, but I hope you’re getting my point. Even the most even, stable people can fall into the machine and be chewed up, through relatively no fault of their own. One bad twist of DNA, one car accident, one layoff, we are all one something away from pulling the ripcord to our bankruptcy parachute.
But you can take steps to minimize your risks:
- Get rid of debt. Now. Seriously, right now – I’ll wait!
- Put together an emergency fund. A few thousand dollars in the bank can make what would be a cliff to one person seem like hurtle to you.
- Get some life insurance, or reevaluate what type and how much life insurance you have. Surely you don’t want your wife and kids going into poverty if you get in a serious accident and languish in the hospital a few weeks before expiring.
What are your thoughts on other ways to avoid bankruptcy? What have I missed here? Do you agree with me, or do you believe there are absolutely ways to annihilate the chance of having to file? Please share… 🙂