While surfing blog comments at other personal finance blogs, I came across a story of a reader. Which reads like below.
A couple of years ago, I was doing well when it comes to finances. I knew I was doing better than a lot of my friends and family. I was having a good job. Everything was actually really, really great.
Then recession came—and my world, as well as the others’, came tumbling down. The start-up company wasn’t able to pick itself up and it had to close down, leaving me with no job at all. My wife was also laid off from her job. No matter how much we searched for work, no one would like to take us! For seven months, we weren’t able to do anything, and before we knew it, our savings dwindled. We could hardly pay our utilities, much more our credit card bills.
The invincible feeling I had dissipated; and I was left with anxiety, panic, and self-pity. For over a year, we were struggling, depending sometimes on the help of friends and family.
I haven’t faced financial failure in my life so far. Somehow I managed to get around with single income. But, this situation is reality for many of us. Recession, one bad investment choice, a job loss or not-so-wise lifestyle often lead to a situation like above when living becomes tough.
The tips and techniques to cope with that kind of situation needs mental strength, above all. Its easy to blame the system on your failures, but, a system (at your work or in the economy) works well collectively and it doesn’t necessarily benefit everyone within the collection. You need to fight to achieve maximum benefit a system has on offer.
Don’t be victimized by recession or lob loss, don’t get victimized by one bad decision. Take steps to prevent yourself from future financial disaster.
If you haven’t financially failed yet, learn from others who have. Always remember that today’s learning is tomorrow’s treasure.
When disaster does happen due to your negligence, learn from that, scrutinize how did it happen and don’t repeat the same mistake ever. Past failures lead to future successes.
I’d like to share with you some tips on how to cope with financial failures:
1. Acknowledge there is a problem
Knowing the problem is half way towards solution. It’s normal to be in denial. The situation is completely new to you. Most of all, you never expected it to happen. However, the sooner you’ll learn to embrace the reality and get into the point of realization, the faster it’s going to be to pick yourself up, dust yourself off, and move forward. When you have problem with money, don’t show off your wealth and stop living with borrowed money.
There’ll be plenty of time to show off your wealth, power and taste later. Admit you have a problem, at-least to yourself and your immediate family.Confession also helps lowering others expectations from you. Live in a world of truth and reality.
2. Ask for help
One of the best ways on how to cope with financial failures is to ask for assistance from the experts. Especially if you don’t have a thorough background on personal finances asking an expert helps. you can approach banks, your broker or your friends asking for ideas on how to manage your finances.
More and more people these days seek advice online. I would say getting help this way is beneficial but equally dangerous. If it takes relatively less amount of money, hire an expert (or a new profession, a money coach). Who can go deep in to your personal situation and needs, who can work with you on regular basis.
I would recommend doing proper research before hiring a help who works for money. Even though they are professional but remember you are already in financial trouble and you should try to minimize your expenses. Pinch every penny you have.
3. Pay your debt first
Perhaps one of the biggest discoveries you have while you’re trying to learn how to cope with financial failures was that you didn’t save enough when things were bountiful. When money starts coming in, opt to pay our debts first. Strive not to incur any kind of debt while rebuilding yourself financially.
Prepare a plan to pay off your debt, talk to your creditors on lowering terms of re payment. There are hardship programs available from almost all credit card companies, all you need to do is talking to them. Even lowering mortgage interest is a possibility.
There are a lot of debt counsellors around who promise to fix your debt problems and almost always they require some fee. In my personal opinion, the things they suggest is nothing new. You can yourself fix your debt problems without incurring a fee.
4. Be creative
Oh, definitely, be creative and ingenious with our ways of living. It’s possible to cut expenses on almost anything non essential. Stop buying things, eve if at a discount. Try to look for cheaper entertainment. Don’t miss out on having fun, when life gets difficult you need to add fun to it. Consider taking family staycation and enjoying things that can make you feel richer without needing a single penny out of your pocket.
And you know what’s the best thing that could come out after all the trouble? You don’t really need a lot of money to get things done or have some fun! being rich is a state of mind. Make yourself richer internally.
One very valuable advice, don’t blindly do things on other people’s list, always filter and do what really works for you and your family. For some downsizing home or car helps but for other it might not work. Relentlessly cut back on things you don’t value and never miss good opportunities to spend money on things you cherish.
Going forward make every effort to keep expenses lower than earning.
5. Do your job with passion
I often told this in this blog. Unless your employer is going out of business, There will be someone still working for it even if there’s job loss. Be one of the valuable employees. Secure your job, learn new skills, diversify your expertise and be prepared to take on new role. Always look out for early signs of trouble at work and adjust yourself.
It’s always better to realize no one is secured with respect to retaining the job forever. But, its not hard to be one of the last persons to be asked to leave. Prepare yourself for the imminent job loss.
If you have lost your job already, be prepared to use your time in money earning opportunities. It’s better to earn small than none at all. Even getting a part-time job helps.
Don’t give up. Setbacks are a part and parcel of our life. The person who asked the above question had made it. You can make it too.
What are your thoughts, readers? Like to add on to the list? Or, do you have a financial trouble?
Financial Success For Young Adults says
Paying debt off and being debt free leaves you with way more flexibility in the case of an emergency situation. I think you can cut recurring bills and maybe downsize spending and make the savings last longer when there are not bills from debt piling up.
Thanks Latisha for pointing that out. For most cutting recurring billing is the best solution. Bottom line is when you are in trouble don’t take on further debt. stop it right there.
Paying debt off helps. But helps the most is acknowledging that you’ve got a problem.
I also do feel that acknowledging the problem is the best you can do. The faster you can do it the better shape you’ll be in future
Newlyweds on a Budget says
I haven’t come across a financial hurdle like this although I have been close. I’ve been laid off twice and both times I was lucky enough to get a job within weeks.
I do believe though that you can definitely depend on family and friends for support. I know my family has been wonderful and I’m never embarrassed to asked them for help when I need it.
Thanks Erika!In almost every kind of trouble family is the first one you should go out to. Thanks for taking time to comment
Not surprisingly, I’m right there with you on believing that paying off debt is key to getting into good financial shape. Analyzing what happened to figure out what you could do differently to prevent it from recurring is also important. One other thing I would add is to try to remember that others have gone through something similar, and that you are not alone.
This is a valuable re assurance that things should turn around
Paula @ Afford Anything says
You can also try getting odd jobs, or freelancing, or taking on part-time work while you’re waiting to get a “real” (salary/benefits) position.
I have a friend who — just a few months ago — worked long shifts for $11 an hour, then came home and applied online for jobs. After 2-3 months, she found a much better job, but her $11-an-hour gig helped her pay bills in the meantime.
yes very true, in fact I did mention that as well. Earning whatever little helps.