No one goes looking for a financial disaster or loss of money. A money loss may take form of a job loss, a burglary, theft, death of a family member, divorce, emergency medical bill, etc. In truth, people who are on the verge of a financial crisis may not know exactly what the right thing to do is; of course, it always boils down to one thing and that is to hope it will pass.
Some individuals may go into so-called denial mode; that is, thinking they can go on spending just the way they used to since a new job or a potential source of income is just around the corner to help them get out from this mess. However, this can be the worst decision you can ever have.
If you can’t prevent a financial disaster, you need to survive and overcome one. A financial disaster, loss of money can pout you in debt and even can make you bankrupt. Apart from other facts like ruining your relationships, losing your family.
How to recover from loss of money
- Evaluate your financial strengths. Determine how much money you still have in your savings and checking accounts, you may also consider your retirement plan and other sources of income.
- Assess the value of your total assets. This may take into account the value of your house, your car and other valuable properties.
- Determine your total debts. Just like your current assets, it is also quite important to evaluate your total debts in order to know your debts that need to be paid on its due date such as student loans, credit cards as well as mortgages etc.
A personal finance tool can help you know the current numbers. You need to link your financial accounts to it. I use PersonalCapital to keep track of my net worth, income, spend, cash flow and investment health. I linked my banking, brokerage, credit cards accounts. Also I did add the value of my home and cars to derive at most accurate value of my financial strength.
There are various other tools in the market, but since I use only PersonalCapital, I strongly encourage you to consider signing up and link your financial accounts to it. Don’t worry no one can take money out from your account if you link your accounts. Your credentials are as secured as they are in the bank websites.
- Set a target saving. Try to achieve your target saving goal every month. Only then you’ll know how much time it’ll take to recover from the loss of money you just had. If it’s too long of a wait, figure out other improvisation. Try to work hard and switch jobs, your aim should be to increase your monthly cash flow. This can be done either by earning more or saving more, if not both.
- Set a budget. As much as possible, reduce your monthly spending. Keep in mind that your greatest savings will only happen by reducing your food and housing costs. To help you, 101 ways to save money.
- Get in touch to all your creditors. If you are in debt. It will help to enable them know your present situation. It’s going to be a wise decision to discuss lower monthly payments until the time your situation finally changes. Never approve an initial “no” response; it’s advisable to negotiate with the supervisor or the manager. It is worthy to consider also that sending unvarying token payment amounts can greatly aid a lot.
- Change your shopping and purchasing habits instantly. Call off superfluous memberships to various monthly recurring cost entertainments such as DVD rental clubs and fitness centers. Carefully ponder in order to ensure that you do not incur additional charges in case you break a contract earlier. Take a huge cut in your impulse spending habit. Instead turn them in to saving.
- Cut the excess from your life style. Now is not the right time to do live lavishly, else you’ll perish later. Stop frequent Friday gimmicks, dining out or having a good time at the night clubs with loved ones and friends. While you’re in a period of financial struggle; it is advisable to stop all these unnecessary spending until your situation changes or improved. By doing so, you can save approximately 50 by up to 70% on your total foods costs. Keep in mind that you can still have a good time or spend quality time with people dear to you without spending too much. You just need to be creative or resourceful and you’ll realize that spending lavishly on eating out or clubbing isn’t really a practical choice.
- Never shop unless you need to. In reality, people can possibly call off purchasing clothes for several months. If you need to purchase something, you may consider shopping at close-out store or second-hand shops.
- Get a roommate or a renter. In particular, if you live alone, you don’t need a big place to stay. To help you cut down your housing cost by 20 up to 50%, having a renter or a roommate to whom you can share paying your housing costs with can be a wise decision.
- Car pool, ride share, if possible. It will help you reduce your transportation costs if you consider ride sharing or taking the bus. Aside from the fact that this can cut down your fuel expenses and other driving-related expenses, commuting can also be one way of relieving from stress since you can enjoy sight-seeing or take a nap while on the bus.
- Look for extra income. Try to look for side hustle, besides having a full-time job. You can baby sit, look for freelance jobs at the internet, working at fast foods, baking and selling your pastries or cookies and the like. This way, you earn extra income and at the same time be proud of yourself that you can do other jobs besides your current job. This will also prove that you’re capable of doing lots of other meaningful jobs out there.
- Consider auction or garage sale. Auction or sell some household items which you no longer use. This will not only help you de-clutter but you can also earn extra money to help you make both ends meet.
Good news is your still living you still have your loved ones around. The only thing you now need to recover from a financial disaster, is by taking your family along and including them in your planning process.
If your only way out is to face hardship for certain time, you better get your family’s agreement. Don’t let depression set in. There are frugal fun ways to enjoy life. Budget for some enjoyment and going out.
But, for your own benefit, you can’t go on living like before the money loss. You find out ways to do those fun things and ways to keep your family happy. Sometimes we do enjoy our lives better with less.