It seems to be a universal truth that we’ll all experience financial hardship at some point in our lives. The hardships and challenges being faced seem to have multiplied in regularity and seriousness since the 2008 global financial crisis. However, there is nearly always a way out, and having a clear plan to help you turn the corner can reduce the pressure and depression that it can be easy to succumb to when you find yourself in such a situation.
Below are a few tips to help you in your hour of need.
Be brutally honest
Whether you’re wondering what to do if your credit card application is denied, or you’ve just got home and discovered an eviction notice stuck to your door, being brutally honest about your situation will allow you to identify and correct the root causes in the shortest possible time.
With our digital lives constantly expanding, it can be easy to lose touch with reality to some degree. However, your problems are likely to only exist in reality, so being present and aware in the physical world will help you see the truth of the matter. Spend some time analyzing the steps and choices that led to your current situation. If there were factors beyond your control, don’t get bitter or angry, just let them go and move on to the things you can control.
This honest self-reflection will allow you to identify your part in your current situation, as well as any bigger problems that have been going unacknowledged until now.
Take the short-term hit
If you’ve found yourself in a hole, you’re probably going to need a period of immense frugalness to help fill it in. Cut your costs every way you can. Budget any income you have to cover the most important things first. If you’re money no longer covers all of your costs, look at ways you can cut costs to bring your expenses in line with your earnings.
It can be difficult to live in this way, but this will ultimately serve two purposes. Firstly, it will help you get out of trouble in the shortest time frame. Secondly, as time passes and things get better, this experience will stay with you, acting as a constant reminder to why you need to be vigilant with your finances to prevent this happening again.
As your situation improves you can adjust your budgeting accordingly, being a little more generous to yourself. However, to avoid finding yourself in this situation in the future, it’s important to acknowledge that the unexpected happens and try to prepare yourself for unforeseen expenses.
A built-in flexibility will allow you to keep fine-tuning your financial plan whenever you need to, always maximizing your efforts and options. As you learn more about your finances, you will naturally start to work smarter rather than harder. As your confidence and your finances grow, you’ll be able to start setting realistic goals, and then you can challenge yourself to beat your predicted time frame of achieving them.