Financial_Crisis

How to Get Out of a Financial Crisis

Money problems affect most of us at some point or other, and they can be a great source of anxiety. A financial crisis could result from a redundancy, bankruptcy, medical bills or any number of factors, and the consequences can be devastating, especially if you have a family to support. However, wherever there is a problem, there is a solution – so try not to panic. Instead, follow these tips to help yourself (and your credit) recover from your money woes.

  1. Don’t procrastinate

Money problems won’t go away because you bury your head in the sand. On the contrary, debts tend to grow when you don’t address them, and unpaid bills will accrue more fees the longer they go unpaid. The only way to deal with your money troubles is by facing them head-on. Your financial crisis won’t be resolved in a day, so you’ll need to dedicate time and resources to reducing your expenses and working with your new budget constraints.

  1. Communicate

Most debts and accounts can be frozen if you run into money troubles, so it’s best to communicate with your creditors directly. Financial struggles are common, even if no one talks about them, so yours won’t be the only apologetic phone call your providers receive that day. Prioritize payments like rent, food and electric bills, and work out an affordable payment plan for your other expenses.

  1. Explore your options

Once you’ve dealt with any immediate debts or late payments owed, you’ll need to work out a plan for the future. Perhaps you intend to get another job or apply for social security benefits. Make a list of all the things you could do to either decrease your outgoings or increase your income. Your list might include ideas on refinancing your home mortgage, consolidating your debts, cutting down on unnecessary expenses or taking on a second job to boost your income. 

  1. Stop using credit cards

Relying on credit cards to pay your debts or household expenses is OK for a time, but in the long-run, it will only make your financial problems worse. You should only rely on credit cards or loans if you’re sure you can meet the repayments, not to get yourself in further debt. While this is good advice for getting yourself out of a financial rut, it will also help prevent furtherdebt in the future. 

  1. Focus on the solution 

Dwelling on financial problems can lead to stress, anxiety and even depression. Therefore, it’s best to stay focused on how you can solve your problems with money, rather than how you got there in the first place. There’s no shame in having money struggles every now and then, and there are plenty of services that can help. You don’t need to face your financial crisis alone.

Once you’re out of the immediate crisis, you can reflect on what went wrong and how you can safeguard your financial health in the future – such as starting a small savings account or cutting back your spending. Try to see this experience as a learning curve rather than a disaster, and your finances will benefit in the future.