8 ways to bounce back from financial disaster
A financial crisis is seriously tough, but it can be the beginning of something new. Here's how to dig yourself out.
This post comes from Marilyn Lewis at partner site Money Talks News.
These are uncertain times. Jobs aren't as dependable as they once were, and a serious illness can devastate your finances.
Even people who are well-prepared can make mistakes or encounter misfortunes that ruin their finances. It can happen to the best of us.
If it does, it helps to remember: This is not the end; it's the beginning of something new. People bounce back from disaster all the time.
Here are eight tips that can help people regain their financial footing:
1. Accentuate the positive
Corny? Maybe a little. But make no mistake: Keeping your attitude upbeat really works. So does staying in the present. You'll want to learn from your mistakes, but rehashing them endlessly keeps you from moving on.
In the same way, worrying about the future robs you of time and energy.
2. Seize control
Learning precisely where you stand in a crisis is painful. But there's also relief in knowing what you're up against. You can't dig out until you know how deep your hole is.
- Get a grip by tracking your expenses.
- List all the bills you simply have to pay -- rent or mortgage, utilities, insurance, groceries, car payment, gas and whatever else you need to cover to keep going. Add them up. This is the basic amount you need each month. Put your wants aside for the moment.
- Make a stripped-down spending plan including, for now, only those crucial bills.
3. Get professional help
Pride has its uses, but paralyzing you isn't one of them. If you hit obstacles you can't get around, don't waste time being stuck. Reach out to people with the expertise you need. A trustworthy credit counselor, for instance, can negotiate lower rates and a debt repayment plan with your creditors, taking bill collectors and pressure off your back.
Find accredited credit counselors. Their advice is free and debt repayment plans should not cost more than $50. Get any agreement in writing before paying a cent. Don't hand over money before you've received services.
4. Beware of crooks
Panicked people in financial distress are a juicy target for fraudsters. Credit repair schemes are notorious for fraud. Start now to repair your credit yourself -- for free.
When it comes to credit problems, time is your friend. In seven to 10 years, even negatives as severe as foreclosure and bankruptcy will drop off your credit reports.
Seriously. Exercise has surprising powers to keep your mood up, energize and focus you and move you forward. In this TED Talk video, author and psychiatrist John Ratey explains how "physical exercise turns our brains on."
6. Safeguard your housing
Call your landlord if you're renting and ask if you can make smaller payments for a few months until you can get back on your feet.
If you are a homeowner, call the mortgage company right away. Don't wait to get into trouble. Most lenders have foreclosure prevention programs to help homeowners in crisis. Here's how to reach many larger lenders and mortgage servicing companies.
Here's a helpful primer from the Federal Reserve explaining how to proceed with a lender. It also includes immediate and long-term solutions to financial problems and explains options such as deed-in-lieu, short sale, loan modification, repayment plans, reinstatement and forbearance.
7. Find additional income
While you are figuring out where your life will take you next, you're going to need money to keep the furnace on and groceries in the fridge.
- Check with local schools to ask how to become a substitute teacher. Not all schools require teaching credentials.
- If you love pets, launch a pet-sitting or pet-walking business.
- Have you always wanted to work from home? Read "10 Tips for Finding Legitimate Work From Home."
- Do house sitting. Keep your rates competitive to get your business off the ground. Or do it free to get free housing. Here are three sites that offer to connect house-sitters with homeowners:
- Ask at schools about jobs as a bus driver, temporary janitor or kitchen aide.
- If you're handy, set yourself in business doing home repairs. Get cards printed up and post them on bulletin boards at grocery stores, hardware stores and community centers. Put your name out there for free on your local Craigslist (under "services").
8. Learn about resilience
"Resilience is that ineffable quality that allows some people to be knocked down by life and come back stronger than ever," says Psychology Today.
"Resilience is ordinary, not extraordinary," says The Road to Resilience, a brochure from the American Psychological Association. It offers strategies for developing resilience.
More on Money Talks News:
The foocking Batch should be fired and her pension taken away.
Your 5th Amendment rights do not include the right to refuse to answer questions put to you by your employers (congress/citizens). You can not refuse to answer our questions and expect to keep your job. If you do not answer our questions you should be fired with no benefits, no severance and no pension. Everything in your workspace should be confiscated until an investigation can be completed. Your choice, answer the questions or exercise your right and be fired.
I am in the midst of this in my personal life - recover from HUGE financial setbacks and blows.
I agree with most of what it is written here.
Disagree the "talk to your Landlord" if you are renting. No one I know will let you pay less rent than you agree to when you signed the lease. It might cause them not to renew your lease the next time if they think you will have trouble paying. So it might not safeguard your housing to let your landlord know you are struggling. Then having to move will add to financial stressors. Just make rent, a good clean rental history and keeping your housing situation #1 priority. This is only in regards to renting. By all means, if it is a mortgage, talk to your lender. They do have foreclosure avoidance programs and will work with you.
Under "beware of crooks" I would also caution against payday advance/payday installment loans. Tempting when you are struggling and need cash NOW. Sure you get immediate gratification.
But the interest and getting into their "reloan" cycle will ONLY MAKE YOUR SITUATION THAT MUCH WORSE. I promise you. Plus many are pretty shady and you could get your identity stolen.
This isn't mentioned but some friends/family may try to help you out when they know you are in trouble. I personally have found borrowing from them has made relationship situations awkward and caused some issues. If I could go back in time, I would NEVER have accepted the money they offered to loan me. If you can get a second job or do anything else to raise money to get you out from under do so. The intention of helping another out is good, but has unforeseen consequences.
2001 - Taxes cut
2001-2008 - Federal spending increased every year
2005 - Home values starting to go DOWN nationwide
2006 - U.S. unemployment starting to INCREASE
by 2008 - $2 TRILLION had been wasted in Iraq
2008 - The "President" (Bush) tells Congress to appropriate $ 1 TRILLION for banks to avoid a nationwide financial melt-down
2008 - Stock market crashed, wrecking 401's and IRA's nationwide
Yes it took 8 years, but G. W. BUSH and his "conservative" friends destroyed the financial well being of every American.
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