8 Tips to Overcome a Financial Crisis

April 23, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obstacles and challenges will occur to your finances eventually...no matter how much you plan.  It's just reality.  I am and can be an over-planner at times.  Analyzing numbers and planning every minuet detail can reduce the risk of financial burden but every now and then, life throws you a wicked curve ball that you just cannot hit.  With these eight tips, I have outlined a road map to help steer you in the right direction and to get you back on course in the event your financial situation takes a detour and makes a wrong turn.  

 

THE 8 STEPS ARE:

 

1. ACCEPT THE MISTAKES & CHALLENGES THAT COME YOUR WAY. 

 

I am not saying to give up and let the chips fall where they may.  Rather, use the moment to correct your mindset and motivate yourself to take action.  It is during these times of stress and difficulties when your leadership is critical and crucial.  Be the leader! 

 

When I was in my early 20’s I got into serious credit card debt.  This challenged proved too great at the time.  I wouldn’t accept defeat or bankruptcy, so I treated the symptom and got another job.  Yes, I actually had three part-time jobs.  I was working whatever odds and ends just to stay afloat and to eat.  It sucked!  But I learned a very valuable lesson.  Live within your means.  So when symptoms arise, you must treat it. 

 

 

2. TAKE THE MISTAKES AS AN OPPORTUNITY TO PLAN FOR THE FUTURE.

 

Without these interruptions, we might miss some great things in our lives. Learn to be ready for unexpected mistakes to occur.  Working three part-time jobs taught me a lot about myself.  I learned and received a strong work ethic.  This built character and a sense of morality that I might not have received elsewhere.  I learned a whole new appreciation for debt and money and it led me to go to college to earn a finance major.

 

 

3. DECIDE WHAT YOU WANT TO ACCOMPLISH.

 

Set a target of what you want to accomplish then set a strict budget and follow it through. When the crisis is adverted, try to follow the same plan.  According to a Gallup poll, less than a third of Americans actually maintain a household budget. 5

 

 

4. NEVER BE WITHOUT A BACKUP PLAN.

 

Knowing that you can survive a crisis takes the panic out of making changes. Panic is normally your enemy more so than the actual crisis.

 

 

5. DO NOT IGNORE THE SITUATION, BE PROACTIVE.

 

If you can be the one suggesting a solution you will be working with people that will work with you. If you wait until your creditors are demanding payment, you lose options. Cut expenses and pay debts. I love Dave Ramsey's quote "rice and beans tonight and tomorrow it is beans and rice."

 

                                                  Related: 4 Easy Ways to Cut Expenses

 

6. PRIORITIZE YOUR OBLIGATIONS.

 

 

Know which ones are most critical as you come out of this crisis. It will be short term, but you also have to live. Things like mortgage, car payments, utilities and groceries take are more important than credit cards. Look for ways to cut expenses without long-term contracts such as Cable TV and cell phones. Change your spending habits. As David Bach, author of "The Automatic Millionaire," suggests, "Find your Latte Factor." What he means are those things you buy that are not important to your daily living.

 

My friend, Mindy, at TheFrugalMama.org discusses how she and her husband paid off $21,000 of debt in 3 months.  They did this AWESOME accomplishment by tracking their spending and having a plan. Read more.

 

 

7. KEEP AN EYE ON YOUR CREDIT REPORT.

 

Do not let anything get completely out of hand. Know what other will see later on. Keep a diary of what you did and when. The future creditor will appreciate knowing that you did not run from the crisis.

 

                                                  Related: Check Your Score

 

8. LOOK FOR WAYS TO GET A SECOND OR THIRD INCOME.

 

Cash flow is king to getting past a crisis. Look at work from home opportunities or contract type work, so it does not have to dictate when you are away from family.  There are numerous videos of How to Earn Passive Income. When I first discovered this, I was shocked this is a reality.  So I studied and learn and now receive extra income from advertising, ebook sales, and my website: DollarOtter.com

 

                                                  Related: 8 Easy Tips to Make Money for Summer Vacation

 

Earning passive income did take me several months to build and construct because I had a huge learning curve.  But once I started earning money, I knew this opportunity was real and I have continued to stay focus on this to allow me to really focus my time with my clients.

 

Treat any crisis as a wake-up call. Understand that the earlier that you catch a crisis, the more options you have to solve it. Build a crisis-proof wealth plan early in your life, and you will weather any storm that appears on the financial horizon. Remember also that more wealth is created during trying times. If you are prepared when the storm hits you can look to gain wealth than just save your credit tail.

 

In the blog article Make the Most of Losses in Life by MoneyWithAPurpose.com, Fred outlines several key points in dealing with financial stress and how to overcome such obstacles.  He too explains the purpose of an emergency fund and how this little money saver can be a life saver. Check out his article. 

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