The problem confronting Hostess Brands is similar to the ones that prompt many municipalities to file for bankruptcy protection: namely, that it cannot sustain the pension system it established many years ago.

Another problem Hostess Brands faces is the number of its creditors. Reports indicate that the junk food producer owes money to between 50,000 and 100,000 creditors – most of whom are former employees with pension plans. The sheer volume of creditors can make settling out of court difficult, and may have contributed to the company’s decision to choose bankruptcy.

Similar Problems Leading to Individual Bankruptcy?

While it’s easy to brush the problems faced by Hostess and many other large companies aside as unique to big businesses, the lessons from this giant-sized bankruptcy filing can provide important guidance for individuals. Here are some.

• Review your recurring expenses. If you’re struggling with paying your bills each month, it’s time to review what you’re paying for – and whether you’re getting your money’s worth. Cable and TV packages, cell phone plans (do you really need all those minutes?), and energy costs are all prime targets for cutting monthly costs and freeing up money to help you pay down debt. Downgrading to less luxurious entertainment and/or switching to energy-efficient light-bulbs and shower heads could save you significant money in the long term.
• Determine whether you can afford the services you’re paying for. Hostess doesn’t have enough money to pay its former employees. Do you have enough money to pay the people who work for you? If you’re looking to cut back on expenses, reevaluate your hair styling, manicures, lawn care, house cleaning, and any other services that you could cut back on or do yourself.
• Be wary of long-term service contracts. Cell phone providers are notorious for pushing customers into long-term service agreements. Credit card issuers and cable providers sometimes do the same. But unless you live in an area with no alternatives, don’t get sucked into an agreement that you might face penalties for trying to cancel, unless you’re positive it will benefit you for its duration.

Even if you end up filing for bankruptcy after making adjustments to your expenses, the process should prepare you for the type of living that will help you recover from bankruptcy, stick to your repayment plan (in Chapter 13 bankruptcy), and reestablish your credit so you can move forward and get past your debt struggles!

In a business context, the reasons for changing a name after bankruptcy seem obvious: because many consumers don’t understand that bankruptcy can be a tool for reorganization of debts (rather than simply a way of closing a company), a name change helps the company redefine itself in customers’ eyes.

The change, too, puts the bankruptcy firmly in the past. And on the financial and legal level, starting business under a new name may allow a company to more effectively eliminate certain financial obligations.

Rebrand Yourself after Bankruptcy for Financial Success

While we’re not suggesting an actual name change following a bankruptcy filing, rebranding in other ways may help you flourish in your post-bankruptcy life. Here are a few ideas for creating a whole new, debt-free you after bankruptcy:

• Open a new savings account. If you don’t already have one, open a savings account and commit to contributing to it regularly, even if it’s only a few dollars here and there. Check your balance often to keep yourself motivated. If you already have a savings account, open another one to help you meet specific goals like going on vacation or buying a new car.
• Start a new (financially friendly) habit. Commit to one new debt-savvy behavior every month or so. This might include opening and paying bills as soon as they come in (or at a set time each month), consciously saving part of your salary, finding a new route to work to avoid spending triggers, or reading personal finance books from the library.
• Get self-aware. Journal or blog about your financial struggles. Even if you don’t feel like you’re finding solutions to money problems, the simple act of articulating them should help you see patterns and avoid costly habits in the long run.
• Ask others to keep you accountable. Tell your friends or family members about the new you. Ask for their help. Instead of a bonding trip to the mall, for instance, suggest meeting for a less expensive activity, such as taking a walk outside or sharing a cup of coffee.
• Be patient! Remember, you aren’t a business and you can’t reinvent yourself with a snazzy name change alone. Accept that you’ll probably have setbacks on your road out of debt – everyone does – but that they don’t have to mean you give up on your debt-free lifestyle.

The numbers paint a vivid picture of how the cost of college has changed over the last few years:

• In 2007, when Fidelity first conducted its study, only 58 percent of parents noted that they had begun saving money for their children’s education.
• More than 50 percent of parents who have children younger than five are still repaying their own student loans.
• Almost half of parents with young children are forking over about $576 each month for education or daycare costs for their kids already.
• In 2007, only 27 percent of parents with very young children had started saving for college; today, that group has grown to 40 percent.
• Based on expected and average savings rates, the average family today will be able to afford a mere 16 percent of college costs for its children. In 2007, the average family could afford as much as 24 percent.
• Since 2007, the cost of college has ballooned by 26 percent.

So, to summarize: more parents are saving money than before, but that money won’t go as far as it did in the recent past, thanks to ever-rising college costs.

Affording College

College can present some major financial conundrums for a family of modest means. After all, the statistics about college educations seem to argue both in favor of and against getting an advanced degree:

• Earnings potential: Most studies find that, despite rising education costs, college graduates have the potential to earn more over a lifetime of working than those who skip college.
• Student debt: The average college grad these days hits the job market with close to $20,000 in student loans. Considering that those loans are not dischargeable in bankruptcy and that the unemployment rate is not coming down, that debt could mean big problems for recent grads.

Still, there are intangible benefits a college degree can offer. FiveCentNickel.com suggests some unconventional college payment strategies for parents trying their best to help their kids thrive:

• Seek small scholarships. Though offers for hundreds of dollars may seem paltry compared to the total tuition price tag, admissions counselors may smile on the extra help and offer more aid. Give your kid the job of seeking out and applying for these scholarships during high school.
• Consider Advanced Placement (AP) courses. Offered free at high schools (plus a small fee to take the final test), these are accepted as credit at many universities.
• Consider other credit options. Classes at a local college or community college during high school can help your kid get general education credits out of the way for less than they’d cost at a four-year university.
• Think about transferring. Living at home may not appeal to your child, but offer a compromise: live at home and attend a community college or state university for a year or two to save money, and then go away for the remainder to get the “full” college experience.
• Push jobs. Asking a child to work part-time to help with expenses is a great way to help him or her learn how to handle money.

That’s a frightening possibility, but it points to the larger economic problems affecting the country right now. So what might all this mean for folks exiting bankruptcy? Here’s a look at some steps to take after bankruptcy in an economic downturn.

Life after Bankruptcy in Tough Economic Times

Most of the guidelines for life after bankruptcy don’t change much in a down economy, but there are some tweaks that are important to take note of.

• Look at the causes. In a rough economy, this is more important than ever. If your income doesn’t cover your expenses, you need to find more work or, if that’s not possible in the current employment environment, set a new budget. Without assessing what caused your bankruptcy, it’s likely you’ll fall into old patterns and need bankruptcy help again in the future.
• Know what you want. Bankruptcy can make getting out of debt easier, but it’s not a stress-free solution. In a tight economy, you’ll have to work especially hard to get yourself into a healthy financial place. Setting specific, concrete goals can make that work easier.
• Check your credit report. At www.AnnualCreditReport.com, all Americans can view a credit report from each of three major bureaus once a year for free. Try doing this every four months (i.e. check your report from each bureau at regular intervals during the year) and correct any mistakes. Incorrect information on your credit report can lower your credit score, making everything from jobs to apartments tougher to nab.
• Rebuild credit slowly. Lenders aren’t offering credit cards as freely as they used to, and it may be especially hard to get credit right after a bankruptcy filing. But the key here is “slowly.” Check credit card offers a few months after bankruptcy and if nothing looks good, wait a while and apply again. Then, pay your bill in full each month. This will go a long way toward establishing your credit.
• Be wary of scammers. Predatory lenders prey on the most likely victims. In the credit-building world, that often means people with bankruptcies in their recent past. Move slowly with new credit offers. Have a trusted friend or advisor review any loan terms you get to make sure they’re not exorbitant and won’t lead you back into debt.
• Lean on others. One upside of exiting bankruptcy during hard times is that you’re definitely not alone in your financial struggles. Online forums and community-based groups can go a long way toward supporting and sustaining you as you recover and rebuild from bankruptcy.

Here’s a look at some Internet-culled tips for blasting through what you owe and stockpiling what you’ll own in the future.

Part One: Delay Gratification

In order to eliminate debt and set yourself up for strong finances in the long term, delayed gratification is a tool you’ve got to have. Get better at making smart financial moves by:

• Knowing your future self. Having specific dreams and goals for the you of five and 10 years in the future makes saving and debt repayment into a more concrete business. Saving money may be easier if you’re saving it for a specific goal.
• Distract yourself. Fixating on what you can’t have (or shouldn’t spend money on) might drive you crazy. Next time you’re dwelling on the impossible, walk away and immerse yourself in something (free) that you enjoy.
• Treat yourself. Excessively restrictive budgets wear people down. To maintain a budget in the long term, it has to have a little bit of flexibility. Make sure you spend a little money on something that pleases you on a regular basis.

Part Two: Pay Down Debt

Once you’re in the right mindset, the twin objectives of eliminating debt and saving money may seem more manageable. When focusing on debt:

• Write everything down. If you haven’t gotten into the habit of checking your credit report regularly (at AnnualCreditReport.com), now’s the time to get started. The only way you’ll have a truly realistic repayment plan is if you know exactly what accounts you have.
• Forget minimum payments. Paying only the minimum on debts each month will put you in a cycle of debt that’s very difficult to escape. Instead, consider a debt-blasting strategy like the snowball or the credit crunch.
• Find extra money. Whether it’s from a garage sale, an inheritance, freelance work, a raise at work or something else, use extra money wisely. That is, put it toward your debts.

Part Three: Save Money

The Internet abounds with tips and tricks for saving money. Still, the best and most inventive bear repeating. They include:

• Save at work: If your employer offers matching donations or pre-tax savings plans, take advantage of these, which essentially amount to extra income.
• Save when you shop. Leave credit cards at home, use a list, ask for a discount, haggle with vendors and use coupons. We all have items in our fridge that get thrown out and items in our closets that don’t get worn – try to eliminate those knee-jerk purchases!
• Save on gifts. Simply writing down gift-giving holidays on a calendar can help you plan and prepare for these occasions. Consider opting for no-gift holidays with some groups (this works well with older family members, especially those who have to travel to be together) or learning how to make homemade gifts.

Financial stability may be a destination, but it’s always a moving target. Establishing sustainable behaviors as you eliminate your debt will help you maintain financial health in your later life!

So here’s a guide to doing just that.

A Snapshot of Your Financial Life

1. Income. Remind yourself what’s coming in each month. Keep that number in your mind.
2. Expenses. This includes utilities, loans, food, entertainment, gym memberships, everything. Break this out into categories, budget -style.
3. Debts. It may not be pleasant, but remind yourself what you’re paying to whom and when you’ll be finished with it.
4. Goals. Do you still want the same things you did when you started your budget? Or maybe you don’t have any specific goals yet. Either way, make sure you know what you’re working toward; otherwise, it’s a lot harder to manage money.

Once you’ve got an idea of where things stand, you can start looking for areas to spend less, save more or earn more money. Here are some pointers I found useful:

• Cut utility bills. I’ve read a lot online about how much electricity some appliances use just by being plugged in. Cut your electricity bill by using power strips that have an off switch or unplugging stuff you aren’t using. There are also tons of tips online about weatherizing your home to save on heating and cooling costs.
• Cut your rent. If your lease is up soon, consider moving to a cheaper apartment (if possible). In some cities, rents vary greatly by neighborhood. But do research: consider the cost of moving, proximity to necessities and whether you’ll have to pay for parking, laundry and other extras.
• Get more credit. Every six months, call your credit card issuer and ask them to raise your credit limit. Keep in mind: the goal is not to max out your credit card at increasingly high levels, but to improve your credit score by having more and more credit available. This may only work if you have a positive payment history with the card.
• Reevaluate your “extras.” Be honest about how much you use the things you pay for. Shop around for better deals on Internet, cable, gym memberships and anything else you spend on. If you find a better deal, call and ask your current provider to match it. If they won’t, consider switching. If you’re feeling really brave, eliminate extra expenses altogether.
• Earn more. Got some spare time? Look online for paying gigs or part-time work opportunities that require skills you have. Making a little extra money each month can help you reach all your goals faster.

I think we can learn a few things from all this.

Budgeting: It Doesn’t Matter How Big the Pie Is

For those of us with normal jobs (i.e. non-superstar jobs), budgeting can be stressful. After all, it’s easy to fall into the trap of thinking that if only we had a little more money each month, our financial woes would be gone. But let’s learn from the NFL:

• Players get their salaries over a four-month period. The average salary in the NFL varies by position but hovers around a million dollars (!). But many players have financial trouble even during their active careers. Lesson 1: You’ll never have “enough” money. Learn to work with what you’ve got.
• The average career length is 3.5 years. So if you’re an average NFL player all around, you’ll make about 3.5 million from playing football. The problem is, while it’s coming in it can seem endless. Lesson 2: Crunch some numbers. Be realistic about your long- and short-term goals and needs. Closing your eyes and hoping for the best financially won’t do much for your long-term security.
• More than 80 percent of players go bankrupt after retiring. That’s an awfully high number, considering the incomes these guys command while they’re playing. Lesson 3: Resist lifestyle inflation. It’s easy to ratchet up your spending every time you get a raise, but assuming your income will rise indefinitely is as dangerous as assuming real estate values would never drop. Some financial advisers recommend taking a lifestyle upgrade on every other raise: instead of spending, save the rest of that money.
• NFL playing reduces players’ life expectancy. Those guys take some serious hits and are put through grueling workouts. Injuries and concussions can seriously cut short an otherwise ordinary life expectancy – and can also cost a lot of money. Lesson 4: think of your health as an investment. Sometimes it seems like junk food is cheaper than health food and that time spent working out will take away from time working (and earning). But in the long term, eating well and staying active can save you significant money in healthcare costs.

I know I’m always surprised and a little dismayed when I hear about a former professional athlete declaring bankruptcy, but considering the way the cards are stacked against many of them, I guess I shouldn’t be. After all, I’m lucky enough to never have been hit on the head as part of my career.

• Ditch insurance: Is flooding common in your area? What about forest fires? Snow? In addition to natural disasters that can cause serious damage to your home, there’s always the risk that you could be burglarized or caught unawares by a visitor who gets hurt and decides to sue (probably a visitor who won’t be invited back, to be sure). Rather than hope for the best, do some research about what kind of insurance you’re likely to need most where you live – and sign yourself up.
• Break the law: Even a small infraction like speeding can cost you major cash if you get a ticket or your insurance goes up. And bigger crimes can hold you back from getting hired at attractive jobs. And I won’t even mention what it costs to get bailed out of jail.
• Don’t worry about kids: If you don’t have kids yet and haven’t much thought about whether you will, a great way to ruin your finances is to play roulette and see what happens. Not only are kids expensive, but child support payments are strictly enforced by the court. In bankruptcy, for example, child support debts cannot be discharged, meaning that anyone who owes it must eventually pay.
• Take on a lot of debt: While some debt may be necessary to get through life (and is even beneficial in small doses to help build credit), taking on too much debt can cost far more than it’s worth. Some particularly bad debt moves include: carrying a balance on and/or maxing out credit cards, taking on a mortgage that you can just barely afford and buying a new car with payments you struggle to make. A lot of advice focuses on how to pay down debt, but if you aren’t too overextended right now, look at it from the front end: avoid excess debt before it starts to bog you down.
• Slack off at work: Being an unpleasant, lazy, dishonest or just plain incompetent employee can do wonders for limiting your earning potential. People who aren’t on their best behavior around the office may miss out on opportunities for raises, promotions and bonuses that could significantly increase their wealth. Plus, future earnings might be hindered by behavior that would lead a boss to write a not-so-hot recommendation.
• Spend all your money: This is another variety of going into debt, but refusing to save can have negative effects as well. Emergencies and unforeseen events can lead a non-saver to taking on more debt or filing bankruptcy. Savers, of course, simply dip into their cash reserves.

These tips may not exactly be earth shattering, but they provide a useful reminder of the various facets of earning and keeping wealth.

So allow me to introduce a list of attributes every debtress (or debtor) should consider when looking for a piece of plastic to let into her (or his) wallet.

• Who’s the lender? If you’re trying to establish or re-establish credit, you may want to choose either a large, national bank or a local credit union. These types of card issuers (as opposed to local lending outfits) tend to be viewed positively by potential lenders and thus can strengthen your credit score.
• Do you have to apply for approval? Those with weak or limited credit histories may be better off choosing a pre-approved card their first time out. Why? Because applying for and being denied a line of credit shows up as a negative action on the credit report and can further damage weak credit.
• What kind of fees (if any) come with the card? Some credit cards charge activation fees, account maintenance fees, annual fees and more. Though the Credit CARD Act banned certain fee types, many lenders have simply renamed their old fees and continued charging them. The point is that the dreamiest cards have no fees at all (unless you incur them at some point after getting the card). If your credit is very weak, you may have to settle for a card with some fees, but shop around to find the best deal possible.
• Will the lender report your credit use? In order for your credit card use to improve your credit score, it must be reported to the big three credit reporting bureaus, Equifax, Experian and Trans Union. Be sure to ask about this.
• What are the limit rules? Many credit cards permit limit increases every six months, though you often have to request them. To maximize your odds of getting an increase, use your card regularly and pay the balance in full each month. Sadly, credit cards are like potential mates in this way: you have to act like you don’t need them in order to get one. (On a side note: it is important to request limit increases even if you don’t plan to max out your card. One part of the credit score formula is the credit-to-debt ratio, and the more credit you have available, the better.)

Bottom line: It’s not the picture of your cat on the front of a credit card that makes it valuable. Any time you’re thinking of applying for new plastic, make sure you know what you want and how you can get it.

So for any grads out there, here are some important financial management strategies that can make life in the real world smoother.

• Face your student loans. Most grads today enter the working world with at least some debt from student loans (the average amount currently sits around $20,000). It’s important to understand that these loans must be repaid and cannot usually be discharged in bankruptcy. Your payment record of student loans will effect your credit score. Take time to review all paperwork associated with your loans, consider consolidation and be sure to contact your lender if you anticipate having difficulty making a payment.
• Start working. Even in a difficult economy, you can start your career on the right path. If companies aren’t hiring, offer your services as an unpaid intern so you can learn as much as possible, gain experience and possibly make yourself indispensible to a company (which could lead to a full-time job). All of these are long-term investments in your career. You might also want to turn a period of unemployment into one of self-employment by offering skills you have to those in need.
• Start saving. It is never too early to begin saving money. Emergencies can happen at any time, and having some money set aside can mean the difference between being okay and ending up in serious debt. As a new grad, you can save money by living at home, living with roommates, having funds automatically deducted from your paycheck and establishing a budget right away.
• Think long-term. It may seem too early to start saving for retirement, but it isn’t. Financial experts agree that the time to start thinking about retirement is when you land your first full-time job – after all, the earlier you start saving, the less you have to save per year to reach your financial goals.
• Be realistic about credit cards. Credit cards can be a great way to build your credit history, but they can also lead to tremendous debt for those who aren’t careful. Shop around for a credit card that suits your needs and make a habit of paying your balance in full each month.
• Think about what you want. Managing your life is no small task, but remember: the goal of developing a financial plan is to get to a place of financial stability where you’re free to pursue your dreams, whatever those may be. It’s a good idea to spend some time determining what specific things you want to have and/or do so you know how you need to be handling money to get them.