Despite what the stock market does, the reality for many is that they can’t make ends meet.
If you find yourself in financial trouble, it can be easy to lose sleep over it. You find yourself asking where money will come from and how things will get paid.
There are a few things that you can do that will help you handle financial issues. Read on to learn the steps you need to take if you’re having financial difficulties.
1. Contact Your Creditors
The first step that you need to take is to connect with your creditors. If you know you’re going to miss your mortgage payment or rent, contact your mortgage company and landlord immediately.
You don’t want to wait until a bill is late to take action. When you’re proactive, creditors are more willing to work with you. They know that you want to pay them, you just don’t have the means to right now.
By being transparent with your creditors first, you put yourself in a good position to find a reasonable resolution. Tell them what you are able to do, even if it’s partial payments. They’d rather you pay something than nothing at all.
2. Create a Barebones Budget
If you’re facing financial difficulties, you’ll need to cut back on expenses. The best way to do that is to look at where your money is going and create a barebones budget.
You’ll be surprised to learn how much you’re spending on nonsense. Dining out can be traded in for dining at home. Those fancy coffees can be done at home with a $20 Moka pot, ice, and a blender. You don’t need to have every single streaming service or cable TV channel.
Look at your budget from the perspective of paying off your essential expenses each month. That would be for food, shelter, utilities, and debt payments. Keep your budget to those expenses and trim everything else.
3. Borrow Wisely
Hopefully, you were able to trim your budget to the point where your monthly income will cover those expenses. If not, then you may have to find a way to borrow money to get by for the time being.
You don’t want to max out your credit cards, because that will turn into a high-interest loan that will damage your credit and take years to pay off.
Instead, look for other ways to borrow money. You can turn to family and friends. You might be able to get an emergency loan to cover expenses for a few months or consolidate debt payments.
4. Find Creative Ways to Earn Money
Financial trouble is a sign that you’re not making enough or you’re spending too much. You already went through your budget to cut expenses, now it’s time to learn how you can earn more.
There are plenty of opportunities to earn money. The issue is that some of these ways can take a long time to build up. For example, you can launch a blog or an online course.
You have to figure out ways to promote the blog and get enough quality traffic to earn money. It’s a long process, but if you’re up for the challenge, it can be done.
If you need cash quickly, then look to sites like Upwork or Fiverr to offer services. You can easily pick up gigs on the side that will generate income.
The one thing you need to be aware of is taxes. You’ll be considered a self-employed person, which will change the way you’re taxed. You’ll have to set aside money to cover self-employment taxes, income taxes, and state taxes.
5. Pay Down Debts
As you start getting back on your feet, you’ll quickly realize how draining it is to carry debt. You want to have a plan to pay off all of your debts as soon as possible.
Take the money you earn and set a small percentage aside to pay down any existing debts. This will help you position yourself financially in the future.
6. Get a Financial Plan
Once you have some income coming in again, it’s tempting to resume life like normal. Before you resume your Netflix subscription, you want to plan for the future.
The economy always has its ups and downs. There are also events that just can’t be predicted, like COVID-19 or a labor strike. All of these things can have a direct impact on you and cause financial hardship.
It makes perfect sense to resume your activities before financial trouble, but you also don’t want to go through this experience again. The worry, stress, staying up all night, can take a toll on your mental health.
Instead of spending money again, stick to your barebones budget and put money aside for the future. Make your money work for you by contacting a wealth advisory group that can help you save an invest in the right places.
Recover from Financial Trouble
No one wants to be in financial trouble, but there are circumstances beyond our control. It’s possible to get out of financial trouble, especially since there are more opportunities available than ever before.
You have to start by taking responsibility. Call up your creditors and let them know what’s going on. Then make a plan and a budget. Once you have a budget you can stick to, then find new ways to earn money.
The most important step happens at the end of the process, where you set aside money to prepare for the next downturn. This will prevent financial trouble in the future.
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