Unfortunately, bad hands aren’t limited to the poker table. Sometimes life deals blows that wreck even the best laid financial plans. If you find yourself in financial turmoil, remember that you are not alone. In 2015, 819,760 bankruptcy cases were filed by private individuals. Many more continued to struggle with their debt. Bluffing may work at the poker table, but it won’t appease your creditors. If you’re struggling with a bad financial hand, take steps now to come out a winner.
When you find yourself in a hole, stop digging. You may be tempted to keep racking up credit card debt or take out a high interest loan, trying anything you can to stop the bleeding. Don’t. Instead, take a deep breath and simply be still for a moment. Gather your bills and pay stubs together and take a hard look at what you owe and what you make. Assess the situation as calmly as possible before making a plan to move forward.
Cut What You Can
Take a hard look at your expenses and see what bills you can eliminate. Though you may truly enjoy them, cable television and cappuccinos aren’t necessities. Food at the grocery store is usually less expensive than takeout, as well. While you may already be living lean, many of us are so used to living with certain amenities we forget they aren’t truly necessary. Packing lunches, cancelling magazine subscriptions and making coffee at home are small changes that add up to big savings. When decreasing your bills, you may also be able to increase your income by selling certain assets like collectibles.
If you’re calmly looking over your finances and struggling to find a clear path forward, get help understanding your choices. It is often possible to negotiate with your creditors for a lower interest rate or debt forgiveness. You may also want to speak with a debt consolidation firm or a bankruptcy attorney. Be sure to speak with both, however. There are pros and cons to each option that you should consider carefully before tackling debt via one of these methods. Budgeting and other help may also be available at local churches and other nonprofit organizations.
Stick to the Plan
Whatever path you forge toward financial stability, stick with your program. This seems obvious, but it’s difficult to stay motivated over the long term. Follow your new budget closely and ask friends and family members to help hold you accountable for your spending. If you start to feel discouraged, shift your focus from how far you have to go to how far you’ve already come. Remember that it takes only takes a moment for an unexpected medical issue or job loss to turn your finances upside down. Fixing the problem takes much longer, but is a feat to be proud of.
Getting your finances back on track after a downturn is a difficult task, but it’s one you can accomplish. With a solid plan and the right help, you’ll quickly be on the path to financial stability. It will take some time to reach your final financial destination, so remember to celebrate small victories along the way and stay focused on your goals.
This is a guest post by Kara Masterson. She is a freelance writer from West Jordan, Utah. She graduated from the University of Utah and enjoys writing and spending time with her dog, Max. Kara works with Demers Gagnier Inc. to help families in bad financial straits learn more about the options available to them.