Stabilize Your Income<\/h2>\n
It\u2019s hard to steady your financial footing without regular income. As a first priority, focus on stabilizing your job or self-employment income.<\/p>\n
That may mean finding a new job, which necessitates polishing up your resume. In turn, that might require some fresh certifications or other indicators of competence in your field. Do what it takes to position yourself for the best possible job in your area of expertise, even if it means adding some new expertise.<\/p>\n
Also, explore adding a side hustle to boost your income. If you love real estate, consider a side gig in the real estate field<\/a>, but don\u2019t feel confined there. Your options are as vast as your imagination, from freelance work to driving for Uber to tutoring kids to consulting. When I wanted to diversify my income, I started freelance writing; every business needs copywriting<\/a>!<\/p>\n Related: <\/em><\/strong>BiggerPockets Money Podcast 28: How Anyone Can Easily Make Extra Money Using Side Hustles with Nick Loper<\/a><\/em><\/p>\n Most people approach budgeting wrong. They start by listing their expenses, then look at what\u2019s available for them to possibly save at the end of each month.<\/p>\n Throw your existing budget out the window. Instead, look at your net monthly income, and set a percentage as your savings rate: the percent you\u2019re going to put towards savings and investments. That \u201cexpense\u201d becomes your highest priority.<\/p>\n From there, you can map out what you want to spend on other expenses like housing, transportation, groceries, entertainment, clothes, and so forth. What you want to spend<\/em>\u2014not what you\u2019re currently spending. You\u2019re probably spending too much on many of these and will need to correct it.<\/p>\n Yes, that might mean major lifestyle changes to build the wealth you want<\/a>. You might have to move to a new home, house hack<\/a>, or get rid of a car.<\/p>\n If you\u2019re serious about building wealth, you need to get serious about your savings rate. My wife and I live on less than half our income<\/a>, but it took a dramatic overhaul of our lives. We house hack (through her employer), we live without a car (by choosing a home in a very walkable and bikeable area), we cook most meals ourselves, and we live overseas in a country with a lower cost of living.<\/p>\n Not that we are \u201csacrificing\u201d anything. We travel internationally many times each year, employ a full-time domestic worker, and otherwise live a very comfortable and even extravagant life. But it required very intentional lifestyle design, building our perfect lives and budget from scratch.<\/p>\n Related: <\/em><\/strong>Forget the American Dream\u2014Renting, Not Homeownership, is the Path to Financial Freedom<\/a><\/em><\/p>\n Every time you get paid, your savings should come out of it immediately. If you let the money linger in your checking account or as cash in your pocket, it will burn a hole.<\/p>\n You can automate your savings in many ways. Most payroll services can split your paycheck to go into two bank accounts, for example. Or you can schedule recurring money transfers from your checking account to your savings account or brokerage account for each payday.<\/p>\n You can even take advantage of apps like Acorns<\/a> to automate your savings based on other metrics.<\/p>\n There\u2019s a time and a place for aggressive investments. Emerging from bankruptcy isn\u2019t one of them.<\/p>\n Start with simple index funds for broad exposure to the stock market. If you\u2019re new to stock investing, just start with three funds: a U.S. large cap fund, a U.S. small cap fund, and an international fund.<\/p>\n Better yet, open an account with a robo advisor to set an ideal asset allocation for you. I personally use Schwab Intelligent Portfolios<\/a>, which is free if you invest with at least $5,000. If you don\u2019t have $5,000, try SoFi Invest<\/a> instead.<\/p>\n Most robo advisors can even set up automated recurring transfers for you to simultaneously automate your savings rate and your investments.<\/p>\n From there, you can look into other ways to diversify your investment portfolio to include real estate. Some easy options include crowdfunding platforms like Fundrise<\/a> or GroundFloor<\/a>, or even incorporating a relatively low-risk, low-capital real estate strategy like wholesaling<\/a> or Airbnb arbitrage<\/a>.<\/p>\n But if you opt for the latter, invest plenty of time in learning the ropes so you don\u2019t end up right back where you started. They\u2019re only low risk if you know what you\u2019re doing, and that takes a significant investment of time and education!<\/p>\n Related: <\/em><\/strong>7 Ways to Diversify Your Investment Portfolio<\/a><\/em><\/p>\n If you want to invest in real estate in the future, your credit matters. A lot.<\/p>\n First and foremost, commit to making every single payment on time, every month, for every bill you owe\u2014no exceptions. Your payment history has the single greatest impact on your credit score.<\/p>\n Next, open a couple accounts to re-establish your credit history. Start with a secured credit card: You put down a deposit with them as collateral, and then they issue you a credit card with the agreement that if you default on your payment, they take it out of your collateral. And they report your monthly payments to the credit bureaus like a normal credit card, helping you to rebuild credit assuming you pay in full and on time.<\/p>\n You can then open a \u201ccredit builder loan,\u201d which is not a loan in the traditional sense, but it reports like one on your credit history. Rather than borrowing money, you agree to make a certain monthly payment to the \u201clender,\u201d who then puts your money in an escrow account for you. At the end of the loan term, you get your money back, and the lender reports your monthly payments as if it were an installment loan.<\/p>\n It takes time to rebuild your credit<\/a>. Start now, and take it seriously.<\/p>\n Robert Kiyosaki differentiates between good debt and bad debt and defines them simply enough: Good debt makes you richer every month, while bad debt makes you poorer every month.<\/p>\n Unsecured debts<\/a> like credit cards and personal loans absolutely make you poorer. You don\u2019t need that fancy dinner or those new designer shoes. You need good credit and a strong savings rate if you have any desire whatsoever to build wealth.<\/p>\n Avoid unsecured debt, period.<\/p>\n Debts secured against real estate or automobiles can be useful\u2014but also dangerous. As someone who\u2019s already been through bankruptcy, you know firsthand just how dangerous debts can prove.<\/p>\n Yes, you can get a mortgage after bankruptcy<\/a>. But not right away, and lenders will review your loan application extra carefully.<\/p>\n You don\u2019t have the luxury of making decisions the way most people do, letting your emotions and subconscious make the decision without you realizing it, then letting your conscious mind contort logic to justify your wants. You need to start with cold, hard logic from the very outset.<\/p>\n Is it cheaper to rent or own in your desired neighborhood, on a monthly basis? What about after you account for property taxes, homeowners insurance, and add an extra 8% for home maintenance and repairs?<\/p>\n Consider renting for a while. It gives you more flexibility and provides a predictable monthly housing cost with no \u201cunexpected\u201d expenses like a $5,000 roof repair bill.<\/p>\n Bankruptcy offers you a clean slate, a second chance. Don\u2019t waste it.<\/p>\n Learn from your mistakes the first time around. Become a student of personal finance, learn everything you can about building wealth, budgeting, investing. Read up on concepts like financial independence<\/a> and lifestyle design.<\/p>\n You can emerge from your financial trials either weaker or stronger\u2014the choice is up to you.<\/p>\nOverhaul Your Budget Around Savings<\/h2>\n
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<\/p>\nAutomate Your Savings<\/h2>\n
Invest Conservatively in the Beginning<\/h2>\n
Rebuild Your Credit<\/h2>\n
![\"paying-bills\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2015\/06\/pay-bills.jpg\" "\\"\\"")
<\/p>\nAvoid Unsecured Debts<\/h2>\n
Handle Secured Debt with Extreme Caution<\/h2>\n
Final Thoughts<\/h2>\n
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