As you get older, it's normal to find that you have more money to spend. You may pay off your mortgage and have money to blow thanks to low credit card debt and few other expenses. However, if you continue to live this way after retirement, you could find yourself struggling in the future.
Aging persons can make some simple mistakes that place them at financial risk. Some may choose to sell a home that has been paid off for their "dream home," even though they're no longer working. Others rack up credit card debt thanks to high limits and the anticipation of receiving a monthly check.
Living beyond your means can cause trouble
Living beyond your means can result in a lot of financial strain. It's one thing to purchase a vacation on credit and to pay it off over the next year, but it's another thing to keep putting multiple vacations or activities on your credit card with no intention of paying off that balance within a set length of time.
How can you prevent bankruptcy and financial trouble as you age?
One of the best things you can do is to create a budget that allows you to live comfortably but also still well within your means. For example, if you receive $3,000 each month, you must make sure you're able to afford utility costs, mortgage, medical care, food and the activities you love. Your budget should be under that $3,000 limit, and if you can, set aside a portion to place into your savings account. That way, when you have a major expense come up, you'll be more likely to have cash to cover it.
It's easy to fall into the habit of using credit, because credit cards allow you to pay so little each month to pay them back. Unfortunately, these cards can also come with high interest payments that may cost you thousands more than what you would have paid in cash.
If you find yourself in a position where your debt far outweighs your assets, you may want to consider filing for Chapter 13 bankruptcy, which would allow you to pay off your debt in three-to-five years. A portion of your debts may also be discharged, leaving you with a more secure financial future moving forward.