Filing for bankruptcy has made a huge difference in our finances. What is the best way to tackle a budget we can stick to so we never get this way again? And also, what can we do now to start correcting our credit? – Aaron


You made a huge decision by filing bankruptcy – one that is not easy to recover from. The key moving forward is to make sure that your bankruptcy is a financial turning point. You and your family need to commit to living within your means each and every day from now on.

There is no easy answer to sticking to a budget; it’s just plain discipline. Here are some tips to hopefully help you out:

• Track all of your expenses for one to two months (yes, ALL). You must know how much money is coming in, how much is going out and exactly on what it’s being spent. Don’t forget small cash purchases because they can add up in a hurry.

• Step up savings. Since you have an emergency reserve fund already, the next step is saving for goals like retirement. From your spending record, figure out reasonable ways you can cut expenses to stash cash.

• Be a cash buyer. If you have $500 allocated for gas and groceries for the month pull that money out of the bank and use only that cash to help avoid overspending.

• Set aside “fun money.” Being on a budget is not usually considered fun. But try this: consider allotting a set amount of money for each of you and an allowance for the kids. That is your (and their) money to use as you please. Once that money runs out, you don’t get any more until the next allotment dates rolls around. This avoids the seemingly harmless spending that adds up quickly.

• Monitor progress. Evaluate how you’re doing after a month or two and periodically thereafter. Adjust as necessary.

You were broke and stressed out the first 10 years of your marriage and the bankruptcy will stain your credit record for the next 10 years. But with the right steps your score will improve over time.

First, establish and use various types of credit responsibly. This is all the more important because whatever credit you do receive will not be at a favorable interest rate. As an example, you may get a high interest rate credit card or department store card. You can use it and pay it off each month to start to rebuild your credit record and avoid paying outrageous interest charges.