Are you struggling in the face of severe financial difficulties? Do you have more bills due than you can possibly
pay? Are you in the middle of a family or medical crisis and don’t know where to turn for answers? Even though you might feel as alone as you’ve ever felt in your entire life, you aren’t the only one who is going through or has gone through a rough patch. Believe it or not, you can come out on the other side with your sanity and your health intact. However, it’s going to take some planning and it’s going to take some work.
Financial difficulties range from a broken car to a busted water heater to a negative health diagnosis or sudden disability. It might not even be you personally that is solely affected, but a partner or family member. While money does not create joy, it does bring happiness and a certain amount of stress relief. Without money? You feel on edge, like you’re ready to implode at the littlest spark. You are tense and you might be at a loss as to where to start to make money appear and make the stress disappear.
The following five steps can help you approach financial difficulties with a sense of calm and in an organized fashion. You must take care to not overlook the smallest detail, but be concise, conservative and patient. In addition, you have to take time to relax and don’t let your worries consume you. Read more about these five ways to take back control over your financial difficulties today.
Create a Detailed List of Income and Expenses
Here is the first step, one you absolutely should not put off or delay: construct a detailed list of all debts owed, along with expected income flow each month. When you are stressed out, sometimes it’s easier to just look the other way and ignore the problem in the hopes that it will get better with time. When it comes to your finances, a lack of knowledge about what’s going on with your accounts is not a good thing. You need to have up-to-date information on where your dollars are going in order to put them to work in the best way possible.
There is a right way and a wrong way to start creating a budget – because that’s what this list truly is. You can write your budget down on paper or you can create a spreadsheet on your computer. Either way, make sure the system makes sense to you, since you will have to reference it many times in the future. You can also use automated software, but it might be better to wait until you have all the information documented manually first.
Write down or enter expenses first. Ignore all the extra, one-time expenses you might have this month. Only write down the expenses that occur every single month. For example, you will want to record your rent or mortgage payment, your car payment, your car insurance, and your cell phone or cable bill. Organize them by type of bill to make it easier to view. For instance, categorize your rent and electric bill together as living expenses. If you have credit cards or other loans, list both the monthly minimum payment and the total amount you owe as well, so you have an instant idea of the total balance when you view your budget spreadsheet.
Next, it’s time to look at how much money you bring in. If you depend on small business income or any part-time work that is hard to estimate, review your last three months total pay and find an average figure you can rely on with relative certainty.
Once you subtract all of your monthly bills from your income, what’s left? From this amount, figure out how little you can manage to spend on groceries and gas and stick to a weekly spending amount. Whatever is leftover from that – that’s how much you have to put towards your sudden expenses that have come up. If you want that figure to go up, consider cutting out monthly expenses that you can do without for a set amount of time, such as premium cable,
ultra fast internet or a gym membership. Lower your grocery bill by cutting coupons. Save gas by carpooling to work or taking public transportation. Whatever you do, plan on a budget and don’t veer off the map. It’s better to cut back rather than fall behind on all of the bills, some more important than others.
Investigate Ways to Make More Money
So let’s say you’ve lowered your monthly budget as much as humanly possible, but you still need cash to take care of your crisis. Before you consider credit cards or loans, dig deep and try to find out if there’s a way you can make more money. The simplest way to erase any bill is to just have the money to pay it – don’t you think? If you currently work full-time, think over the past 6 to 12 months. Have you received a raise? If not, consider asking your boss for a review. They may decide to reward you for your dedication and hard work.
If you currently work a 9-5 job, consider applying for a part-time job on the weekends or at night to scrape together some extra cash. You could bar-tend, wait tables, work at a cafe or deliver takeout orders. If the food service industry is not your forte, consider working retail at a store near your home. You could also babysit, clean houses, or work with landscaping or snow removal companies, depending on the time of year and the location. Get a seasonal
job at a warehouse loading trucks. There are many companies looking for part-time workers available during 9-5 off hours that may give you an opportunity to boost your income.
If you have exhausted your money making options and still need a cash boost, there are many credit and non-credit-based loans available for borrowers from all financial backgrounds. Whatever loan you select, make sure the repayment amount fits into the budget parameters you set in step one. There is no use getting a loan if you cannot afford to pay back the cash according to the repayment plan.
Make a Debt Repayment and Savings Strategy
Part of taking back control over your financial difficulties is ensuring it does not happen again in the future. What if you could guarantee that you will never feel as stressed out about money again as you are right now? It starts with not only budgeting, but creating a plan to save a cushion so the next time you are faced with a large bill, you have the monetary reserves to tackle the expense without an issue. This approach must also involve a plan to eliminate crippling debt so you are no longer tied down, with your income promised to others before yourself.
As a general rule, debt repayment and savings should go in a specific order. Even though it might seem to conflict with your instincts, put money away equal to one month’s worth of your entire budget first, before you make any extra debt payments. During this time you can continue to pay the minimums on your debt and not incur any additional debt. If your monthly budget is $3,000 and you only have about $300 extra a month, this will take you 10 months to complete, unless you start pulling in extra money to speed up the process, or cutting things out of your budget that you don’t need. Nobody ever said saving and debt repayment would be easy – this is where you need to start.
Once you have one month’s worth of savings in an emergency account, this will provide you some peace of mind. If your car breaks down, use this fund to make the repair. If you lose your job, you can still pay for at least one month’s expenses while you search for a new one. The next step is to put all of your extra money towards paying off your debt. Categorize your debts in order of highest to lowest interest rate. Pay off the debt with the highest interest rate first. Some financial gurus say to approach debt repayment in a different way, paying off the debt with the highest balance first, then working your way down to the lowest balance – a process known as the “snowball” method. This could work too, but it makes more sense to pay less in interest. All the debt will be paid off at some point, right? And you’d probably rather have to pay less of your money to your creditors – as little interest as possible.
Once you have paid off all of your debt – and beware, this could take quite awhile depending on how deep in it you are – you are ready to continue building up your savings. Revisit your one-month’s worth of emergency funds and add to this until it becomes three to six months’ worth of your total budget. Since you will no longer have the minimum payments to make on your debt, this goal will be reachable in a much shorter period of time.
When you’re finished? You will have no debt dragging you down. You will have enough money to easily handle any other financial difficulties that come your way. Sure, it’ll take time and it’ll definitely take sacrifice, but it’s one of your best options when you’re trying to take back control over your financial difficulties and stay on top of your finances for life.
Focus on Personal Stress Relief
Another way to gain control of any financial difficulties is to regain your inner sense of balance. A sudden hit to your finances can feel like a personal attack on your psyche. You must take a calm, meditative approach to any crisis, especially one involving your finances. Knee jerk reactions will only hurt you in the long run.
Even though making extra money may be your main priority, set aside time for yourself, at least once a day. Go for a walk. Take a 30 minute break from worry and read a book. Make sure to get enough restful sleep every night, because if you’re worn out and tired, you aren’t good for anything. Focus on exercising at least 3-4 times a week and don’t scrimp on healthy fruits and vegetables in your diet. No financial difficulties are worth sacrificing your health.
Work With a Financial Planner
Financial planning is a great way to get a professional objective opinion on how to handle your finances. Make an appointment with a budget counselor – it will be well worth the money. In some cases, they may base their fee on your income or offer a free consultation to get started. They will tell you how to approach your current financial difficulties in the smartest way possible, so you are maximizing your available funds and reducing the amount of catch up work you have to do to make ends meet.
Financial planners can also help you with investing and saving for retirement. These may not be on your list of priorities right now, but don’t put them off for too long simply because you’re facing financial difficulties. You need to always think about the future, otherwise you WILL have financial difficulties throughout your life and into retirement, something nobody wants for their golden years.
If there is one fact that is certain, it is that we all will encounter financial difficulties at one time or another.
Whether you are in the midst of one right now or not, these suggestions can help you prepare your approach next time you face a seemingly impossible financial situation. Struggling to get your head above water is perfectly understandable, but going into panic mode might only have a detrimental effect. Instead, take these five steps into consideration and plan your attack on the financial difficulties with confidence. You have the power to change your life and overcome obstacles in your way and no matter what you face, with willpower and hard work, you can turn your budget around.