The Road Out of Debt: Bankruptcy and Other Solutions to Your Financial Problems

Chapter 4. Budgeting Your Way Out of Debt

Annual income twenty pounds, annual expenditure nineteen six, result happiness.

Annual income twenty pounds, annual expenditure twenty pounds and six, result misery.

—Charles Dickens's David Copperfield

How well do you know your finances? The next step on the road out of debt is to know your financial situation and how to use your money to your benefit. Knowledge is power. Without an understanding of your financial situation, even if you get out of debt this time, it will only be a matter of months or years until you find yourself in the same situation. See how well you spend by taking the quiz "Are You a Smart or Sorry Spender?"

Quiz: Are You a Smart or Sorry Spender?

1. If you are given $100, what is the first thing you would do?

   1. Pay your credit card balance

   2. Go out to dinner

   3. Shop for new clothes

   4. Pay your rent or mortgage

2. If the next day you are given $500, how would you spend it?

   1. Celebrate with friends

   2. Buy lottery tickets

   3. Put it in the bank

   4. Make a car payment

3. If on the third day you find $20 blowing down the street and no one is around, what would you do?

   1. Buy a big lunch

   2. Buy an extra cup of coffee

   3. Put it in your purse or wallet for later

   4. Put a lost-and-found ad on Craigslist

What's Your Score?

• Question 1: 4 points for A, 1 point for B or C, 3 points for D

• Question 2: 1 point for A or B, 3 points for C, 4 points for D

• Question 3: 1 point for A or B, 3 points for C, 0 points for D (We don't believe you!)

If you scored 9 or higher: Congratulations! You are making the ...