No matter how much we prepare, the reality is the majority of us are going to experience a period of financial difficulty at some point in our lives. Making a major financial mistake or experiencing a sudden financial life change can often leave a feeling of discouragement, hopelessness, stress, and frustration. The reality of having a small amount of money to resolve a lot of bills can often lead a person to being so overwhelmed that they have no idea even where to begin. When experiencing these feelings, the best thing to do is to confront your situation head-on and take steps immediately to repair it.
The best thing to do is to confront your situation head-on and take steps immediately to repair it.
Below are seven practical steps to help you survive a financial crisis and get you on the road to recovery.
Respond Fast. Do not make the most common mistake of waiting to address your situation. Facing it immediately allows you to dramatically minimize the damages. The longer you wait to take action, the more the problem compounds and the longer the recovery time. Ignorance is not bliss; it is dangerous. Burying your head in the sand and ignoring the problem doesn’t make it go away. In fact, it will only cause your crisis to have a greater impact on your life.
Ignorance is not bliss; it is dangerous.
Rework Your Budget. Review your budget and identify where you can eliminate all unnecessary expenses. Prioritize all of your expenses and cut the rest. One bit of advice my father gave me when I was young has always stuck with me. He said, “What’s radical to some is necessary for others.” It may seem radical or extreme to cut that expensive cable bill for a while and miss your favorite TV shows, but it may be necessary for you. It may require you to trade in your vehicle and cut your car payment, insurance, and fuel costs down. Remember drastic situations require drastic actions. Don’t prolong your crisis any longer than necessary in order to maintain a lifestyle you can no longer afford. And don’t allow pride and embarrassment keep you from your financial recovery.
What’s radical to some is necessary for others.
Contact Your Creditors. Contact all of your creditors and let them know your situation has changed and discuss your ability to repay them. Attempt to restructure your monthly payments and debt. Oftentimes creditors will work with you to make your situation more manageable, so don’t be afraid to ask.
Limit Use of Credit. Avoid using more credit as much as possible. We have all been in a situation where we feel the need to use credit to carry us over. The problem is that it’s like trying to dig your way out of a hole as opposed to climbing your way out. The more you use credit, the further you dig in the hole, not out. Use with caution.
Get Help and Use Your Resources. Tap all of your available resources. There is safety in an abundance of counsel as well as in sitting down with a qualified financial professional to help you navigate your crisis and identify specific steps you can take. If you are one of the millions of American’s who’s unemployed, consider temporary unemployment benefits while looking to regain employment immediately. Use any available benefits and insurance programs to supplement any loss income.
Maintain Healthy Relationships. Stay connected to positive people. Those relationships, family, or friends, can help rebuild the right perspective, motivation, and emotional strength that are often depleted by crisis. They also serve as accountability to stay the course.
Maintain a Positive Outlook. In order for recovery to begin, you must take positive actions. It’s extremely difficult to get positive actions with negative thoughts and emotions. Positive thoughts must replace thoughts and feelings of hopelessness and discouragement. If not, you risk staying in a place of inactivity, doing nothing, or creating and repeating self-destructive behavior.
Positive thoughts must replace thoughts and feelings of hopelessness and discouragement.
Some things that happen to us are simply out of our control. But the reality is we do have the power to control how we respond and even how we prepare for the unexpected. Know that you have the ability to make it through this rough period. You’ve got the choice to either make it happen or make excuses. Go make it happen!