NEW YORK (9/21/11)--A college degree may make you more attractive to employers and improve your earning potential, but it doesn’t protect you from bankruptcy. Those with college diplomas accounted for 13.6% of the 1.5 million personal bankruptcies filed in 2010--an increase from 11.2% in 2006--according to a recent study from the Institute for Financial Literacy, South Portland, Maine (NYDailyNews.com
, Sept. 14). The study surveyed more than 50,000 debtors in credit counseling or money management courses. While fewer white collar jobs and reductions in income may be partly to blame for the trend, 70% of those filing for bankruptcy cited being overextended on credit as the prime reason for filing, according to the report. Consumers can’t control the overall impact of the economic downturn, but they can control their debt level. Here’s how you can you prevent being overextended:
* Reduce necessary expenses.It’s easy to cut back on everyday costs. Keeping your thermostat at a steady temperature, purchasing generic items instead of brand name goods, and unplugging electronics when not in use are just a few ways to reduce expenses. * Limit unnecessary expenditures. Rent a movie instead of going to the theater, prepare meals at home instead of dining out, and visit parks and libraries to take advantage of free entertainment. * Curtail credit use. If possible, try not to make any purchases with credit cards. That way you won’t continue to add to your debt level. Instead, use cash, checks, or your debit/check card for purchases. Monitor your online banking account to prevent your account from being overdrawn.
For more help controlling spending, read the Financial Fitness Challenge “Run a Financial Stress Test” in the Home & Family Finance Resource Center.