Financial burdens can be a major source of stress when you find yourself in hard times. Unfortunately, most people will experience financial stress at some point during their lives due to unexpected emergencies, debt, medical bills, job loss and more. The good news is that being prepared for this type of situation and being aware of your options can help to alleviate some of your financial worries. Here are some tips to consider:
1. Assess Your Situation
First and foremost, be honest about the financial situation you’re in. As difficult as an accurate assessment may be to face, lying to yourself, your partner, or anyone else who may be involved, will only delay a solution. Before you can begin to look for help or ways to get back on track, you must have an accurate idea of where your finances currently stand. Examine all of your financial accounts to determine how much money and debt you currently have, as well as future amounts you expect to owe. Don’t create a best-case scenario, and don’t fudge the numbers.
2. Develop a Budget
If you don’t already have one, create a budget. Not only will it help you to address your current financial setback, but it will help you keep your finances on track once your financial burden is resolved. Many people who avoid a budget do so because they think having one will take away their financial freedom or enjoyment. However, a budget should be used as a guide and doesn’t have to be extremely strict or rigid. Rather, you should use a budget to give yourself a general idea of how much money you can realistically spend on certain things and where you can cut back. Costs might fluctuate, and you likely won’t follow your budget exactly to the dollar, but it can help you to prioritize debt repayment, avoid expensive overdrafts, and help you to start saving money on a regular basis. In today’s tech-driven world, there are many online and mobile tools available to help you create a budget and access it from anywhere.
3. Prioritize Your Bills
At the root of most financial difficulties are bills. These can include past due loan payments, unexpected medical bills, and ever-growing credit card debt. Being faced with multiple debts can seem overwhelming and hopeless, especially if you’ve been living paycheck to paycheck and don’t have a savings account you can tap into for emergencies. In this type of situation, it’s important to formulate a plan. Sitting back and doing nothing will only make your situation worse with late fees, interest charges or other penalties. The first thing to do is prioritize your bills and tackle the most important payments first. It may also be worth reaching out to your lenders or creditors to explain your current financial situation. They may be willing to work with you to develop some kind of repayment plan.
One thing to keep in mind when prioritizing your bills is how a missed payment could affect other aspects of your life. For example, if you miss your car payments and your vehicle is repossessed, you may not be able to get to work. If you don’t pay your mortgage or rent, you could face foreclosure or eviction. When determining which bills to pay first, try to make sure the essentials are taken care of.
4. Pay Minimums & Build Savings
Once your essential expenses are taken care of, a good rule of thumb is to make at least the minimum payments due on bills whenever you can. Making your minimum payments will at least prevent you from racking up costly late fees. As you’re able, start to put more money toward your unpaid balances to help pay your debts down faster. Next, take any extra funds you have leftover each month and set them aside in order to start building up your savings. Having funds in a savings account will help you handle future financial emergencies, and alleviate the stress and pressure they bring.
5. Consider Working with a Professional
Don’t be afraid to reach out to a professional for financial assistance and guidance. Someone who specializes in helping manage financial pressure can work with you to create a plan and suggest ways to deal with immediate financial stressors like debt collectors. Having a knowledgeable professional on your side who can be a voice of reason can be a great help and bring you much-needed relief.
Whether you are currently feeling financial pressure, or just want to be prepared for the worst, knowing your options and how to formulate a plan are two important first steps. Remember that doing something to help improve your financial situation is always better than sitting back and doing nothing.