- Personal Finance
Help for Financial Problems
We've all had personal and financial setbacks. We are merrily going along, or at least normally going along. And wham! the unexpected happens. We get into a car accident, have a health problem, or find our spouse cheating on us. Normal is no longer normal, and our life has suddenly shifted, leaving us wondering how to react and recover.
Luckily, there are proven strategies that have worked in recovering from financial setbacks.
Don't Look Back
Alice, from in Alice in Wonderland, Dorothy from Wizard of Oz, and the Gates family in have all taught us that the way to recover from a setback is to look forward. There is no turning back. National Treasure 2 - Book of Secrets (Widescreen)
Too often, we struggle to bring things back to normal, and try to make things the way they were. This doesn't work and wastes a lot of energy. Accepting that this is the new normal gives you the proper perspective.
You have a new situation now. Instead of trying to go backwards in time, you move forward in time and space. Figure out how to go from where you are now to where you want to be in the future.
Stabilize Your New Normal
Now that you have realized that this is your new normal, you will need to figure out how to stabilize it. You probably feel like you are on shaky ground. The setback has created new challenges for you, and you need to find a way to make ends meet in your new financial situation. Often these types of setbacks can cause additional setbacks if you are not careful. If you don't pay your bills, you will have more penalties and interest, and you will get deeper and deeper in debt.
I have written two hubs for this situation:
These two hubs provide steps you can take to stabilize your situation, so you don't continue to keep falling backwards.
Call Your Creditors
You need to create a new budget based on your new circumstances and go over each bill to see how you can reduce it.You will need to cut back on your spending in order to make it through the tough time without getting further in debt. You may need to get a second job temporarily until you are through the crisis.
Call Your Creditors
The key is to keep on top of your bills before you miss any payments. You may need to refinance a car loan, for example, to spread out the payments over a further period of time. In this way, you will have smaller payments. If, in the future, your income increases, be sure to make extra payments to make up for this, since you will be paying more interest over time.
Next, if you think you will have difficulty paying your bills is to call your creditors and let them know. They need to know that you are willing to pay and are having issues. Most likely, they will work with you to come up with arrangements that will spread out your payments further and may even be willing to forgive part of a bill.
Debt Consolidation Loans
There are consumer counseling agencies that may be willing to help you get through a tough time. You can get a debt consolidation loan which may make bill paying easier for you. The company may be able to negotiate lower payments for you or get portions waived. You may be able to do some of these things yourself. Be sure to ask around to see whether the company is reputable, look at the fees and consider whether the debt consolidation loan will work for you. A debt consolidation loan will appear on your credit report, which may make it more difficult for you to obtain future loans.
Taking responsibility is not about assigning blame so that you can punish the culprit, or make anyone feel guilty. Often, when things go wrong, there is something we have done, or something we could have avoided doing that would either have avoided the problem, or at least have lessened the blow. If we had driven more carefully or paid more attention, we could have avoided the accident, even if the other person caused the accident. If you had car insurance, or had saved enough money to cover the deductible, you might not be suffering a financial setback right now.
The point of identifying the problem is to find ways you can avoid this problem in the future. You don't want to make the same mistake twice. Thinking the problem through and then actually taking the steps to implement the ways to avoid it will help you a great deal. These types of situations are learning opportunities. You can at least say you learned from it.
Once you have stabilized the situation, and taken the steps to make sure that it doesn't happen again, you have to move forward. You are probably still in a position that is slightly less than your old normal. Aim your sights on the future, and decide how you can make your life better. Maybe getting additional training will help you advance in your career. Maybe saving up for a new car to replace the one you lost.
You will likely find that you won't have to spend as much to reach your goal as you think. Like an arrow, you have been pulled backwards, but now is your chance to fly off to the future.