 TITLE: Rebuild Your Credit After Financial Disaster CONTENT: ###### Written by: Kristy Welsh\n_Last Updated: April 4, 2017_\nMany of our readers come to this site looking for advice on how to rebuild their credit by either reducing their debt or applying for a credit card. Recently we received an e-mail from a distraught reader wondering how to recover from financial ruin and how to rebuild his credit and retirement account.\nHis story is an all too familiar one. He was a successful businessman who owned his own company and employed about 30 people. His business was real estate based so when the economy took a nose dive, so did his business. He poured his entire nest egg into saving his business but to no avail. Forced to close the doors and file bankruptcy, he has since lost his cars, house, retirement and savings accounts, and is now employed at a job making a fraction of the salary he once made.\nMillions of Americans have seen their finances wrecked by unemployment, foreclosure, medical bills or other setbacks, and are likely wondering the same thing: How do you rebuild after financial disaster? The truth is you may never get back the life you lost, but it is possible to rebuild your finances and your credit over time.\nExamine Your Overhead\n---------------------\nTo make sure you have enough money to rebuild your financial life, figure out what your overhead is every month. Examine the following expenses:\n*   Shelter\n*   Food\n*   Utilities\n*   Insurance\n*   Child care (if needed)\n*   Minimum loan payments\nAfter losing so much, it is hard not to be tempted into buying things you really do not need at this time. Try to resist the urge to spend money and keep your \"must have\" items to under 50 percent of your after-tax income. Do you really need that second phone line or can you do without cable television for a while? You will be surprised at all the frivolous things you spend money on and once you cut them out, you really will not miss them at all. Less is more!\nStart to Save Money\n-------------------\nNow that you cut out some of the non-essential expenses in your life, you can start to put away a little money every month into either a checking or saving account. Start to build a little cushion so if you do have an unexpected emergency expense, you have a little extra money to help you get thru it.\nMake a commitment to put a little money aside each month. You will be surprised that after a year, how much money you have saved. The longer you stick to this program, the more money you will have down the road to pay off debt, buy a car, or maybe even buy a house.\nContribute to a Retirement Account\n----------------------------------\nYou may be shocked to see this task so high in the priority list, but there's a reason: Retirement is expensive, and it's coming sooner than you think. Contributing to a retirement plan can help reduce your taxes and help you build the savings you'll need down the road. If you've been spooked by the market, you can start with low-risk options and ease into stock market investments over time. The point is to get started again.\nAssess Your Debts\n-----------------\nAs with our unfortunate reader, he had to close his business and file bankruptcy due to overwhelming debt. Prior to filing bankruptcy, it is a good idea to talk to a qualified bankruptcy attorney. If you think you can pay off your debts, contact your creditors and work out an arrangement with them before they begin to sue you.\nAfter you have assessed your debts, look to see if you can negotiate these debts with your creditors. If you do not feel comfortable doing this yourself, look into using a reputable credit counselor or debt consolidation company.\nRebuild Your Credit\n-------------------\nYou may feel burned by your creditors and convinced you'll never want credit again. But your credit scores will be vitally important to you in the future if you ever want to buy a home or a car. Credit history information can also used by insurers, landlords and employers, so you will want to eventually clean up and improve your credit history and scores. The good news is that you don't have to take on more debt to fill your credit reports with positive information.\nWe have recently added numerous articles to our site regarding ways to rebuild your credit. Here are just some ways you can rebuild your credit:\n*   Use Credit Unions\n*   Rebuild Your Credit Without Using Credit Cards\n*   Pros and Cons of Prepaid and Secured Credit Cards\nIf you have suffered a serious financial setback, take heart in knowing you will get through it. Follow these simple steps and keep reminding yourself there is light at the end of the tunnel. Keep a positive outlook and ask for help when needed — there are a lot of companies and people out there that are willing to give a helping hand. Once you get back on your feet, you will be able to repay any and all help you received and you just may be able to help someone else out. END