Even though you thought you were prepared, financial disaster struck. You have wiped out…all your money went…your plans were put on hold, perhaps indefinitely. What are you supposed to do now? How do you start over again? Your finances may not be that bad, but economic woes are commonplace nowadays. Who says you won’t be the next one to wake up and discover your bank account says zero? Chin up. There are ways to bounce back. Following are a few tips on how to survive a financial disaster.
It’s Only Money
Although this may not be what you want to hear, remember, it is only money. Sickness, accidents, storms, natural disasters, the death of a loved one, these are all things that matter a whole lot more than money. Sure, money can help you live better, and we all need it to survive, but suffering a financial setback isn’t nearly as bad as suffering a physically debilitating trauma.
Emotional Rollercoaster
Even though losing a considerable portion of your financial worth, or all of it, is not necessarily life-threatening, it could have a significant impact on your life. Depending on your personality and outlook on life, it could be a minor delay in your life’s plan or a disaster you’ll never recover from. The choice is really up to you. Some people decide to simply give up, while others prefer to make lemonade instead. Whichever course you choose, you’re bound to ride an emotional rollercoaster until you sort matters out.
Time for Action
Now that the philosophizing is over, it’s time to get down to doing something about your financial troubles. The first step is to accept what’s happened and take a close look at your financial situation. Upon further reflection, it may not be as bad as you thought. Even if it is an unmitigated disaster there are still things that can be done to help you recover.
Make a Plan
Take stock of your present situation. Reflect on what got you into the financial mess you’re currently in and make a conscious decision to not make the same mistakes.
If you’ve drastically overspent then you know you’ll have to be a lot more careful in your spending. If you lost a bundle in the stock market, don’t think you’ll strike it rich by putting whatever you have left into a ‘sure thing.’
It’s like gambling–you may as well go to a casino and bet everything on black. No, if you hope to recover it’s imperative that you assess your situation and come up with a viable plan that involves hard work and intelligent decisions, not a stroke of good fortune.
Assemble Your Assets
In order to implement a plan to bounce back from an economic disaster, it’s important to know what you have to work with. Make a list of your assets. This is what you’ll be using to begin your financial recovery.
It’s essential that you know where you stand. If you owe a lot of money that must be factored in. if you ever hope to regain a good credit rating it’s imperative that you pay off your debts.
Determine Where You’re Going
A financial recovery plan must begin with an awareness of your starting point. There’s no sense lying to yourself; it won’t solve anything. Instead, make peace with your situation and be honest in evaluating a possible recovery.
Only after doing that can you take the next step, which is to decide where you would like to end up. Again it’s important, to be honest with yourself.
Choose a realistic goal, one that isn’t necessarily easy to attain, but a target that is truly obtainable. Going from dead broke to multimillionaire status overnight is something that is likely to only happen in a movie.
Instead, aim for a reasonable objective. Don’t stop dreaming, but be sensible.
S.M.A.R.T.
In setting a goal, it may be prudent to use the S.M.A.R.T. principle: Be Specific in choosing a goal. Decide on a way to measure your progress. Make sure your goal is Attainable. Be Realistic in selecting a destination. Plan your recovery to happen in a timely manner.
Fine-Tuning
Executing your carefully planned recovery is where you’ll need to be firm in your commitment, but not so firm that you can’t fine-tune the plan along the way.
There are bound to be unexpected hurdles to overcome, but if you stick to your basic plan, you should ultimately reach your goal of financial recovery.
This is the Land of Opportunity. If you believe it, you can achieve it. Never give up.
The English language is full of platitudes, but even though they may sound trite, through hard work and dedication it is possible to recover from a financial disaster.
How to Survive a Layoff
As the recession winds down, unemployment continues to hang overhead, forcing many consumers to do more with less. The American Bankers Association Education Foundation offers personal finance advice for consumers with limited resources — especially the unemployed.
“We all know someone whose job has been affected by the economy,” explains Laura Fisher, director of the ABA Education Foundation. “Even during these difficult times, there are some things that consumers can do to remain in control of their finances — even while unemployed.”
The following are some personal finance tips for tough economic times:
- Assess what you have. Review and update your budget. Consider all sources of income like unemployment benefits, severance payments, savings and checking accounts. Look at past debit and credit card statements to discover spending patterns. ABA Financial Calculators.
- Get your benefits. Unemployment benefits can help you to stay afloat as you restructure your household budget and look for a new job.
- Ask for help. If you are having a hard time paying your bills, contact your creditor to arrange a more manageable payment plan. Then contact the National Foundation for Credit Counseling to find a local credit counselor to help you develop a budget and a plan for paying down debt. To reach NFCC, call (800) 388-2227 or visit www.nfcc.org. ABA Education Foundation’s Help Contacts.
- Talk about it. Inform your network about your employment situation. Friends, fellow club members, former co-workers and other associates can be a great place to turn to find a new job.
- Eat in. Cut out fast food and dining out. It’s cheaper to eat at home. You’ll be surprised how much you will save by taking the time to prepare meals in your own kitchen.
- Cut, cut, cut. Cutting cable television, cellular phone and Internet service can save you hundreds of dollars each month. Use the library’s Wi-Fi, your landline and a TV antenna until income returns.
- Shop smart. Pay with cash or debit cards, not with credit cards. Shop around for deals, use coupons and purchase store brands.
- Get creative. Look for free or inexpensive ways to entertain such as playing family games, choosing the library over bookstores, watching movies you already own or doing some local sightseeing.
- Go green and save green. Cut utility costs by turning off and unplugging unused appliances, wash with full loads, set your thermostat to 68 degrees in winter and 78 degrees in summer and use fans.
Debt Management May Help Alleviate Debt-Related Depression
According to a survey conducted by a non-profit financial crisis center, nearly fifty percent of the people surveyed in debt also experienced or exhibited symptoms of depression.
Depression is usually classified as experiencing feelings of inadequacy, hopelessness, and other negative behaviors and emotions. The survey also found that nine out of ten participants reported significant feelings of debt-related stress.
Depression can create a feeling of hopelessness and an inability to take on financial problems which leads to a vicious cycle of rising debt and deeper depression.
Depression can cause some individuals to become emotionally paralyzed which then leads them to be incapable of developing or following a plan of action to rectify their finances.
If this is you, it is highly recommended that you seek help from a debt relief counselor familiar with depression related to debt or see a professional therapist.
However, many people, have not yet reached that critical point and are still fully capable of learning new debt management skills. And, for many individuals, the depression they are experiencing is simply a phase due to their extraneous debt.
As the debt is corrected, the depression lifts. However, all too often, for some, depression leads to suicidal tendencies or attempts. It is essential that anyone experiencing feelings to hurt themselves, the ones they love or other people seek help as soon as possible. Debt is not worth your life.
Financial stress can feel insurmountable at times whether you have unexpectedly lost your job, are stuck in a cycle of late payments, or have rising credit card debt.
Debt can be detrimental to all areas of your life, but with the right debt management skills and tools, you can get out from under the burden of debt once and for all.
If you are suffering from depression related to debt, one of the best things you can do for yourself is to seek outside help through a debt counselor. Many times, just taking the minimal action of asking for help can make you feel like you are regaining control of your finances and it can begin to ease your depression. Finding help and developing an action plan can help lift those feelings of hopelessness and inadequacy.
Depression can trick your mind into thinking that there is no way out or your debts are so out of control that you will never find a remedy.
The important thing to remember is that it is just the depression talking and outside help, especially those experienced in dealing with debt-related depression can help you see what your mind refuses to acknowledge.
There are many debt management skills they can teach you that will not only alleviate your current situation but will help you learn how to avoid ending up in the same place all over again.
Debt should not be a cause of depression, but it is extremely common for those in debt to experience symptoms. Seek help as soon as you find yourself in debt and learn how you can turn your finances around.