Bumps in the financial road can happen. A health crisis with the bills that come with it can occur at any age. The loss of a job can wreak havoc on finances. And staggering debt can send finances into a frenzy.
Stop and Assess the Situation
Start by taking the moment to evaluate what caused the financial collapse. Was it a circumstance outside your control, or did you do something like a bad investment?If it was in your control, think about how you can avoid it in the future.
Assess what your current situation is. Are you completely broke, or is your wealth reduced? Outline how bad it is. You need to see the big picture before you can do anything about it. Determine how far-reaching this setback is.
What bills do you now have that can’t be paid? Write them down. This includes monthly and quarterly bills. Pull a credit report to help you see where you stand with these bills.
Take Financial Inventory
What assets are available, and how can you use them to weather the storm?
Start with maximizing your liquid savings. This includes savings and checking accounts or money markets. It also encompasses certificates of deposits (CDs) and short-term government investments. These will help in a crisis.
The upside to these assets is you can take your money out without incurring a penalty or financial loss. The exception is CDs, which may require you to forfeit some interest if you close them early.
Unlike stocks, liquid assets’ worth doesn’t fluctuate with market conditions. It’s stable, and you know exactly what you have.
You’ll also need to take stock of non-cash assets. These could include unused gift cards, frequent flyer miles, food staples in the pantry (it’s food you won’t have to buy), and any unused furniture or clothes you could consign. Think of anything that’s worth money. These assets can help lower your monthly expenses.
Develop a Plan
A plan starts with establishing specific goals. And each goal should have a deadline. If you don’t give a goal a deadline, all you’ve done is make a wish.Besides goals, you’ll also need due dates. For example, if you need to pay off credit cards, establish a date when this needs to be done. It will create a sense of urgency and encourage you to work faster and more concisely.
But make a goal achievable—it needs to be realistic.
To correspond with your financial goals, develop a budget. This may seem mundane, but you must lay out what income you have coming in and what is being spent.
As part of the plan and budget, cut your spending back to minimize your monthly bills. Do you really need five streaming services or tennis twice a week?
Pay Bills on Time
Late fees will add up fast. This is not the time to be late on your credit card payments. If you need help making the payments, call the company and explain the situation. Most companies will work with you as long as you communicate with them.Check-in With Contacts and Friends
Contact business acquaintances and friends and ask them to open any new doors to relationships that could be profitable.If you’ve lost your job, call or send out emails telling people you’re looking for opportunities and what qualifications you possess.
Check Insurance Coverage
If you or an immediate family member has had an illness or car accident, it may have buried you financially as well as physically.Check with your insurance carrier. Have all the bills been paid by the company that need to be paid? Read through your explanation of benefits (EOB). What services did you receive versus what was paid.
If something doesn’t look right check with the insurance company. It may have been a coding error made by the insurance company or your doctor. This is very common and is often overlooked.
Pride Can Keep You Down
Don’t let pride keep you from climbing out of your financial hole. If you can’t afford that large house anymore, then sell it. Rent for a while or downsize if you can. Should you still pay for that country club membership if you can’t afford the mortgage or utilities?It Takes Hard Work and a Plan
Despite how overwhelming your situation is, you can survive and prosper again. Evaluate what happened and develop a plan.Goal setting with a deadline is your friend. Avoid beating yourself up and commence with the hard work.
