Can we take on the challenge of living within our means?

The recent recession has brought to light a key issue of concern: Americans' failure to live within their means. When the real estate market was on the rise, credit was all too easy to get and many households got into the habit of spending money they didn't have. The decline of the job and housing markets essentially eliminated the ability to live on credit without consequence.

Take an example of a high-income family from Northern California's Silicon Valley. Though they have a combined income of more than $250,000, they are deeply in debt and found that, as the real estate market began its deep plunge, that they were regularly overdrawing their checking account. When the housing market was on the rise, this family would refinance their home to cover the new debt they had accrued. As the value of their house stopped rising, they could no longer turn to this option and were faced with the harsh reality that it was time for a change.

This family shifted to a previously distant notion of real-income living. They set up a bank account to cover all of their household bills and pay their debt. They then set up a monthly cash allowance to cover additional expenses. In doing so, they did not eliminate purchases such as clothes, dinners out and other "unnecessary" costs but rather put a limit on these expenses. Finally, they began experiencing relief from the continual stress and anxiety that comes with overwhelming debt and an overdrawn bank account.

Can we live within our means? If you live in one of many American households that became too comfortable living on credit and are now paying the price, following this family's example may offer you a viable solution to finally get a grip on your finances. Living on cash does not necessarily force one to stop spending money entirely but places a cap on the amount spent, allowing a debtor to make meaningful payments on unsecured and secured debt.

At the law firm of Jacoby & Jacoby, borrowers throughout Long Island and the surrounding areas can seek legal guidance and representation from attorneys experienced in handling all forms of bankruptcy and debt relief. To discuss your case and concerns,  contact a Long Island debt relief lawyer at the firm today.