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Why You?re Going Through The Turnstile Again ? And How To Stop

By Jay Fleischman, New York Bankruptcy Lawyer

Albert Einstein famously defined insanity as doing the same thing over and over again and expecting different results.  Al was a smart dude, no doubt – but when it comes to his definition of insanity I’m wondering whether he wasn’t being too simplistic.

I’ve been thinking about this quote for the past few weeks as we begin to train a new legal assistant in the office.  He’s intelligent, well-mannered, and loves to ask all the right questions.

A few days back he came into my office and asked, “I notice we’ve got a bunch of people who filed for bankruptcy just a few years ago and are now back with a new filing.  Why is that, and how can we fix it?”

My first inclination was to say that we can’t avoid the disease but only treat the symptoms.  After all, you can’t force someone to change their ways unless they want to do so.  By the same token, getting back into debt after bankruptcy isn’t a case of insanity.  It’s much deeper than that.

It comes down to a way of viewing personal finance.  Most people think of budgeting as a money diet, a tightening of the belt that leads to a positive result as a result of sacrifice.  But the funny thing about diets is that they simply don’t work; they’re a shortcut to losing weight quickly.  As someone who’s battled my weight for most of my life I know the only sure-fire way to lose weight is to eat better and exercise more.  But I hate physical exertion, so the siren song of a diet as a way to lose that ghastly 20 pounds in 4 weeks is powerful indeed.

Same thing with your personal finances.

So if you’ve filed for bankruptcy and gotten your discharge, you have to re-evaluate your spending habits.  And in order to stick with it, you’re going to want to find ways of cutting your expenses in the most pain-free way possible.

Bring Coffee, Don’t Pack Lunch

In New York City, going out to lunch can cost well over $10 even if you’re opting for a cheap sandwich at a deli.  But there’s a social component to lunch, too.  You get to spend time with friends and co-workers outside of the office, gossip a bit, get to know one another, and recharge your mental batteries.  Sitting in the lunch room is lonely, and leaves you feeling left out.

So rather than cutting out lunches entirely, consider bringing your coffee in a thermos in the morning.  If you don’t drink coffee (my partner doesn’t drink coffee, which makes him a freak of nature in my caffeine-dependent universe) then buy soda or bottled water at the supermarket and bring it with you.  It’s going to save you a few bucks each day, which adds up over time.  And it doesn’t cut into your socialization at all.

Shop Smarter

My wife and I like chick peas.  But we realize that most branded, canned chick peas are no different from one another.  In spite of that, some cans run $1.19 and others a mere $0.50.  Same thing, different packaging.

Look at what you buy and compare against other brands for ingredients.  If it’s the same or similar, go with the lower price and see if the family notices.  I’m betting they won’t.

Along the same lines, Google your refrigerator and plan our your shopping so you don’t end up with a bunch of wasted food that just goes into the trash.  If you bought it in the first place then you probably like it.  Why not eat it before it goes bad?

Stop Listening

The one pit that every one of my bankruptcy clients falls into is listening to their friends.  People mean well when they tell you that you MUST refinance NOW because rates will NEVER be this low again.  They truly believe that you MUST have a brand-new SUV that costs $800 a month (I kid you not – I’ve got a client in a Chapter 13 right now with an $800 car payment) because a used car is simply not safe enough.  Your “pal” brings you into some retailer and tells you that some item of clothing would be just perfect for you in spite of the outrageous price tag.

Stop listening.  Now.  These folks aren’t trying to harm you, but it’s like offering a slab of chocolate cake to a fat person.  The cake is delicious, and it really is a fine treat for yourself after a rough week.  But if you sweat on relatively cool days and have trouble climbing a flight of stairs then it’s better to choose something else for dessert.

This is probably the most difficult thing to do, this selective deafness.  But once you can do this, you’ll find that you end up spending far less than would otherwise be the case.

Go Small

Maybe you watch HBO during the summer to catch Entourage.  Perhaps you’re totally into Big Love, Weeds, or any of the other offerings from the paid providers.  But once the season ends you forget about the channel entirely.  Why not drop the channel when the season ends and save yourself a few bucks?  Why not get the episodes on iTunes when they’re released a few days later?  Why not kill your paid television and live off Hulu?

How much could you save each month without sacrificing anything at all in terms of your entertainment?

The trick is to look at alternate ways of getting the same thing, methods that may be less expensive by even a few dollars a month.  Don’t vow to drop all television without looking at alternatives; that’s a dieter’s mentality and it will cause you to boomerang big time.  Instead, make small and incremental changes that will end up having a bigger impact on your life long-term.

The Big Takeaway

You filed for bankruptcy, experienced the soul-crushing self-loathing that comes along with being hounded by bill collectors, and ended up asking some stranger with a law degree for help in exchange for what little hard-earned money you had at your disposal.  You collected an obscene number of documents and turned them over, went to court, and are going to have to take some steps to re-build your financial life.

You can go on a money diet and “be good” for awhile (which for people like me who have been on a diet time and time again know all too well) or you can stop the cycle right now.

What other small changes can you think of?

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Full post as published by Bankruptcy Law Network on January 21, 2011 (boomark / email).