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Bankruptcy by the definition in www.thefreedictionary.com is
"A debtor that, upon voluntary petition or one invoked by the debtor's creditors, is judged legally insolvent. The debtor's remaining property is then administered for the creditors or is distributed among them."
or an easier explanation is
"A person who is totally lacking in a specified resource or quality"
Many people understand the meaning of bankruptcy but do not really understand it in detail. For example, how many types of bankruptcy are there in different countries or what will be a purnishment from being bankrupt.
In fact, you really do not need to know them unless you are working in financial area or you are in a risky situation to be called "bankruptcy." We just know that we don't want to be bankrupt and so the most important thing we need to realize is that how to avoid the bankruptcy. This article will give you an easy tip of how to avoid the bankruptcy.
There's only one rule here which is "Earn more than you spend." Yes, it is that easy and simple. It is even the most important tip to avoid the bankruptcy to "earn more than spend." but do you know that more than 80% of people in the world nowaday have problems to maintain this rule. You don't need to be en expert in financial. You don't even need to know equity or liquidity, mutual funds, debit or credit terms. You just have to know how much money you have and do not spend more than what you have and you will be far away from bankruptcy.
Let me give you an example.
You really want a nice Mustang car and you have collected the money for 3 years. Still, you don't have enough money. Most people will start talking to themself "I can't wait anymore. I am gonna have to start a loan from the bank." or "there's only one life to live. Let's forget about bankruptcy for now. If I wait any longer I wouldn't have a chance to own one in my lifetime." This is not true.
Surprisingly, people who later became a millionaire, of course never close to bankruptcy, have the similiar thought. They would say "I can buy a cheaper car so I can keep my money for somethingelse." or "let's take a bus for another year. I will buy when I have money so I don't have to have so much financial burden."
It's true that you may not be able to drive Mustang ever again in your lifetime but what is actually the point of that? If you can drive Mustang you will still never be able to drive Lamborghini anyway. If you can own Lamborghini you will never drive an airplane anyway.
Whenever you start the "want" it will never be ending.
We have came the wrong way. We are too much enjoy with all the marketing strategies that those gigantic companies feed us. Step away and think about what is the real happiness we want in our life. Walk in a park with your oldies mom and dad or spend the life time paying interest to those financial institution.
I cannot count how many time I hear or read the bankrupt say "I would never done that if I could turn back time." Nobody could turn back time, at least for now.
Let's change your mindset and trust me you will never ever have financial problem, or face the bankruptcy.