The fear
of being hit with a miserable incident that could change your financial
condition, like losing your job, impoverishment, or a sudden medical
emergency, can be a nightmare for anyone. Such miserable events
require you to make major changes in your life and the revitalization
period is incredibly stressful. Often, it is the result of a lot of
trifling constant worries building up to one huge breaking point, and then all
of a sudden everything rushes through, constructing a tidal wave of anxiety and
fear and stress.
However,
your financial crisis can be remedied by regaining your self-control and taking
solid
actions. The financial benefits of dealing with financial crisis—saving
more, paying down debt—will improve not just your self-confidence, but your
overall mood as well. The less you worry about dealing with finances issues,
the more you can enjoy life.
You may consider your circumstances as unique, but
many people around the world have walked this path before you. The road to financial
revival is shabby but the steps to return after the financial disaster are
well-proven.
So let’s
get started with some useful tips that will help you to get motivated to take
control of your finances:
1. Identify the Problems
The first
step to overcoming financial crisis is to identify the primary problem that is
causing difficulties. Financial problems are generally an indication of a
larger issue and to come up with long run solutions, you have to identify the
actual cause of your financial troubles. The idea behind the importance of
uncovering a specific problem is to come up with a permanent solution.
Just like a leaky tap in your house; placing a bucket below it is a temporary
solution. Fix the tap and the leak will stop permanently. Rather than dwelling
on your stress, focus on resolving the problem that’s causing your financial
problems.
2. Create a Budget
One of
the best ways to deal with financial problems is creating a budget plan. A
budget is a weekly, monthly or a yearly spending plan for your money that
guides your spending decisions on important stuff for you. As you create a
budget, it’s important to track your expenses for at least a couple
of weeks (a month is best) to objectively see where and how much you are
spending.
Once you
are able to get realistic numbers from your budget, you can review your budget
critically and seek out areas where you can save. Things like spending less on
eating outside, spending less on entertainment or hobbies, taking lunch from
home to work rather buying it are things that don’t make you miserly or
restrict your budget. They just allow you to go after bigger things with less
stress, like paying off your mortgage.
3. Set Financial Priorities
Determining
your financial priorities is essential to overcome any financial crisis. These
priorities help you to make tough financial decisions such as paying off your
credit card bill, paying your mortgage or saving up for house repairs for your
family; setting priorities will help you solve your money troubles and get back
on track. Your financial priorities should include looking into new ways to
have money coming in too, like a second job, downsizing your home, or even
using assets you have like a mortgage to leverage financial flexibility
for yourself.
4. Address the Problem
For most
people, financial problems can be addressed by reducing expenses and increasing
income, or a little combination of both, but it might be not be the ideal
option for everyone. For humans, changing lifestyle is the most difficult task,
but given the money crisis situation, we are forced to make changes.
So to
deal with it, take small steps to accomplish your goals because big changes are
always much harder. For instance; if you’re running $50 short every month, then
perhaps you should first pay off a small credit card debt that requires a $50
minimum payment each month. By taking small steps get the card paid off, and
then permanently have $50 extra to use in your budget every month or use it for
the payment of another debt, and get all of your debts paid off more quickly.
This
methodology is called the “snowball effect”; putting all extra money towards
one debt to pay it off faster and then use the extra amount towards eliminating
the next debt. It is very useful method for paying debts off faster.
5. Develop a Plan and Track Progress
Once you
have ideas to tackle your financial difficulties, come up with a realistic plan
to accomplish your financial goals with a timeline of weeks, months or years
and track your progress continuously. For example, if your goal is to pay off a
$2,000 debt, make a plan and create a timeline with the amount of money you
will pay every month so that you can pay it off within your desired time frame.
Once you are on the road to achieve it, take a few minutes to review the
progress. Evaluate and assess your plan, see if you are making progress toward
your goals and be open to the possibility of fine-tuning the plan.
Unforeseen
financial challenges are like uninvited guests and can strike at the most
unfortunate times
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