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Resolve To Thrive In The New Year

By Cathy Moran

new years resolution

May I suggest a 2023 New Year’s resolution?  It doesn’t involve diets or workouts or commitments to huge personal transformation.

Take a hard look at your financial situation.

  • How much of your available income goes to paying existing credit card balances?
  • What expenses for health care, repair, or just household maintenance are you putting off?
  • What big dollar items are ahead?
  • What have you saved for retirement?

Consider whether a fresh financial start makes sense.

Just getting by

A life of minimum payments, minuscule bank accounts, and no retirement savings is a life fraught with financial danger.  One illness or even a short stretch of unemployment can spell disaster.

Too often, my clients try to pretend that all is well if they can make the minimum payments on credit cards.  They juggle no-interest offers to move money from card to card.

But debt remains and savings are postponed.

Paying off debt versus paying for old age

Take a look at a little exercise that contrasted paying off a modest credit card debt by making minimum payments with devoting the same about of money to retirement savings.

The results are mind boggling.  Paying off $20,000 in credit card debt with minimum payments takes 37.5 years.  Put the same money into an IRA for the same period and you have almost $316,000.

You can count on having less income in your old age than while you’re working. Take a look at your annual statement from Social Security and calculate how you are going to live on that amount.

The bankruptcy alternative

The secret bankruptcy alternative

Clients walk into my office hoping that I have a magic wand, The Alternative to Bankruptcy, that I can wave and allow them to solve the debt problem without bankruptcy. For most, there is no such secret, unknown cure to debt.

A university study done about 20 years ago found that one in 7 American families would be better off if they filed bankruptcy.  At the time, about one in 17 families actually filed. My experiences over 40 years of practicing bankruptcy law suggest that the finding remains true today.

Fear or pride keeps far too many from the rational solution for a difficult situation.

Resolve to take a hard look at your long term financial health.  It may be time to swallow your pride, file bankruptcy, and devote the energy now spent on managing debt to saving for the future and enjoying the present.

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Filed Under: Featured

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

Bankruptcy Basics

About The Soapbox

You’ve arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said “try”).

Here, I allow myself to tell stories and express strong opinions. We dig deeper into how to consider bankruptcy and navigate a bankruptcy case.

Moran Law Group
Bankruptcy specialists for individuals and small businesses in the San Francisco Bay Area

How Bankruptcy Works

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Remember the old high school cheer:  two, four, six, eight, who do we appreciate? Turns out, that's not just a cheer, it's shorthand for the rule on when you can file bankruptcy again. And it points out that when you can file again depends on what kind of bankruptcy you filed last time. Here's how it … Read more

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