Are you heading towards bankruptcy?

Bankruptcies are at an alarming level in India. Bankruptcy doesn't happen just to financial deadbeats. It could happen to your family member, your neighbor, your friend. It could even happen to you. In everyday's news paper, you could see atleast five such incidents that lead to suicides of the individual along with the entire family. Here are a few warning signs that you are headed for possible bankruptcy, and few tips to avoid any disaster before it is too late.

1. No health insurance or inadequate coverage.
2. Maxing out on your credit cards or charging more than you can pay off each month.
3. No emergency fund.
4. Co-signing a loan for someone else.
5. Tax lien or foreclosure on your home, or repossession of a car or other item you failed to make timely payments on.
6. Borrowing too much on hand loans.
7. No or inadequate savings.
8. Too high investment in high risk avenues and gambling.
   

If you have any characteristics in common to the above 8 points, then you are possibly headed for bankruptcy. Here are some tips to avoid bankruptcy.

1. Make sure you're adequately covered by insurance (medical, homeowners, auto).
2. Avoid impulse spending.
3. Don't use a credit card unless you have the cash to pay it off.
4. Tear up credit card offers you receive in the mail.
5. Set up a budget and stick to it.
6. Don't buy more house than you can comfortably afford.
7. Keep some cash for every day activities and some unforeseen expenses.
   
8. Don't make speculative or high-risk investments.
   
9. Never gamble! No cards! No horse race!
   
10. Don't incur joint debt with others who have questionable financial habits.
11. Plan and Save for the expected expenses like your child's higher studies or daughter's marriage.

These lists cover most cases but still not exhaustive. Post your comments if I can add some more points. Thanks.