In Your Interest – by Valerie Rumbough

How are your finances doing these days? For a lot of Americans, not so well.

Valerie Rumbough

According to the National Bankruptcy Research Center, November 2009 marked the ninth month in a row that U.S. Bankruptcy filings exceeded 100,000, bringing the total number of filings in the first 11 months of last year to 1.3 million.

The recent economic downturn most likely accounts for a significant number of these filings. Several lessons can be learned from this however, that, if followed, may reduce future bankruptcies.

Always spend less than you make. Keep three to six months’ worth of living expenses in savings. If your job can be easily eliminated, save even more.

Be very careful when purchasing major ticket items. If possible, pay cash. For home purchases, determine how much house you can afford and stick to that value. Allow for items such as maintenance, taxes, insurance and home improvement. When financing a home, lock in a fixed rate if possible to avoid future surprise payment increases.

If you are in debt now, work diligently to pay that debt off.

Above all, read your Bible. Yes, the Bible has hundreds of verses that teach us how to handle our finances.

If you do find yourself in a situation where you may lose everything in bankruptcy court, seek counsel as soon as possible. Waiting only increases the problem. Remember, though, that even if you do have to declare bankruptcy, and in the eyes of the law your debt has been eliminated, in God’s eyes, you still owe that money.

When you get back on your feet, work toward repaying what you owe. God will bless you for your honesty and integrity.

Rumbough, CPA, CFP, is chief operations officer with the Baptist Foundation of South Carolina. Contact her at 800-723-7242. In accordance with IRS Circular 230, any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.