A smart budget is the cornerstone of sound financial planning. A budget allows you to keep track of how much money you have, how much you're taking in, and how much you're spending so that you can plan ahead. It might sound like a lot of work, but it's actually pretty simple and the results are worth it. By spending just a little bit of time creating a budget, you can save yourself hundreds, or even thousands of dollars a year.

Click here to download your free budgeting worksheet


If your monthly spending is less than your monthly income, you've got a budget surplus. But if you have a surplus because you are only paying the minimum due on your credit cards each month or because you are not putting any money away in your savings, that's not good. If you are paying just the minimum due on your credit cards, begin using some of your budget surplus to pay off your credit card debts. Your goal should be to get rid of debt as soon as you can because the longer you take, the more interest you will pay. Start with the highest interest debt first.


A debt to income ratio that is under 20% is considered to be a good number. A ratio that is higher than 20% means that you have too much debt relative to your income. If this is the case, it will cost you more in interest when purchasing big-ticket items such as a home or a car, because the creditors can see they are out of your financial reach.


You may consider bankruptcy under the following conditions:

  • You have done everything you can to deal with your debts but you still cannot afford to pay them.
  • You have so much credit card debt relative to your income that despite not charging, your debt continues to grow.
  • You are about to lose your home or your car.
  • A creditor is about to levy against your bank account, seize your property, or garnish your wages and you will suffer a significant financial hardship as a result.
  • You are about to lose your utility service.

Brought to you by Joseph Q. Lou, LLC & CIN Legal Data Services. CIN Legal Data Services is the service & technology firm working with attorneys on performing bankruptcy due diligence services.