Whether it is a business venture that has gone wrong, or the accumulation of too much credit card debt, financial setbacks can be extremely stressful and debilitating. Overcoming them can present a huge challenge, but so, too, can recovering from them to make it less likely that these setbacks are going to happen in the future. So, here is a quick guide on how to recover from a financial setback.
Be Honest About Your Situation
Money troubles still tend to be something of a taboo subject, but unless you confront them openly and honestly, you are going to struggle to get back on track. Often, it is the secrecy that can lead you to get further and further into a hole. Once you have gone through this initial acceptance, you can then start putting practical steps in place to help you recover.
Take Stock of Your Assets
Next, you need to take an inventory of the financial situation that you find yourself in. Write down your assets and debts. There are plenty of financial tools online which can help with this process. Work out how much money you owe versus how much you are bringing in every month.
Set Yourself a Budget
Making a household budget can be a very cathartic process, as well as one which is highly useful. Work out all your expenses on a monthly basis. Some of these are bound to be essential such as the rent, electricity bills, etc., but you are likely to find items which can be cut. We live in a world where subscriptions are common, so now may be the time to start cutting back on these. Your budget can also include items such as how much you spend on groceries every month and the amount you spend on entertainment. Many people spend money freely without really thinking about it, but a budget forces a greater level of scrutiny.
Prioritize Clearing Your Debt
As long as you have debt, you will keep accumulating interest payments, which will make your financial recovery all the more challenging. There are countless blog posts and strategies out there for dealing with debt, but a common piece of advice is to prioritize those with the highest interest repayments first, while still continuing to make the minimum repayments on the rest. Once one is cleared, you can then move on to tackling the next, and so on.
Be Wary with Credit Cards
While credit cards can be highly useful financial tools, they can also be dangerous. If you can eliminate all your credit cards except one, you are less likely to feel like you are constantly juggling your debts. Pay off the balance in full every month to avoid any interest charges. If you can automate the payment to go out of your account at the same time every month, this will be another thing off your mind. If you still find yourself struggling with credit cards, it may be best that you cut them out of your life entirely and focus on what you can afford in the here and now.
Watch Your Online Shopping
While online shopping has been revolutionary in many ways, it can also be highly damaging for your bank account. If you struggle with your online shopping, it can remove your payment cards from your online accounts. This way, if you want to buy anything, you have to input your details all over again, which can give you that extra bit of thinking time to consider whether or not this is something you really need in your life.
Enlist Professional Support
There are many different reasons you may have got into financial trouble. If your business expenses are getting out of control, a professional account can help you to get back on track. If you have experienced a sudden loss of income due to an injury, a legal team like Brown and Crouppen Law Firm can help. Ultimately, the enlistment of a professional service can help to take part of the worry and stress out of your hands.
Speak to Others
While financial difficulties can feel shameful and you may well think that you are the only person in the world going through them, they are much more common than that. Speaking to people can help you recognize that you are not alone, and you may even find that you get some real practical and useful advice. If you don’t feel like you can talk to people in your life, there are plenty of forums online where you can chat with people online.
Control Your Impulse Spending
We talked about online shopping earlier, and there is no doubt that this has fueled an increase in impulse spending. However, keeping it under control is such a big part of recovering from a financial setback. So, the next time that you feel an urge to buy something, allow yourself to have a cooling off period. When you can get back to it, you may find that the initial desire has decreased. You may find that it is something that you don’t really need in your life – or even that you already own the thing you wanted in the first place!
In our money-driven society, we often forget that many of the best things in life are free. The time spent with friends and family are a prime example. Just going round to someone’s house or to your local park can be such a rewarding experience, reminding you that you don’t always have to spend money to have fun.
Recovery from a financial setback can often feel like a long, hard road. However, making that first step is huge when you are heading towards recovery. Ultimately, you have to be honest about the situation that you find yourself in and willing to take the practical steps required to get back on track. You also need to put your confidence in those around you by opening up and allowing yourself to be vulnerable.