How To Manage When You’ve Got Yourself Into A Financial Mess

Money makes the world go around, it’s a vital aspect of daily life, and yet you don’t realise just how important having money is until you don’t have it anymore. Going from having plenty of money to struggling financially can be a ‘”culture shock”’, because the lifestyle change is dramatic.

If you’ve got yourself into somewhat of a financial pickle, shall we say, it’s important not to panic. You might be feeling like there is nothing that you can do to make things better and that you are destined to be financially troubled for the rest of your life, but that isn’t the case.

You can find a solution.

The stress can be enormous, and social studies have shown that one of the number one reasons for suicide is because of financial problems. It’s easy to feel like there’s no way out of the situation that you have found yourself in, but that’s not the case – there is always a way out of any financial problem

Managing when your finances have got out of control isn’t easy, but the truth is there are plenty of options available to you. You can get things back on track- you just need to know what steps you need to take.

Take a moment

 

First things first, take some time out to think carefully about your situation. What’s going on in your life may not be easy, and the main reasons that people get into financial issues are the loss of employment, relationship breakdown, and family problems.

Whatever the reason, it’s important to understand that you can make things better for yourself. So take a moment to think about your situation and get to grips with the fact that it’s fixable.

While you may not be able to fix the issue immediately, what you can do is take steps to start making amends. Spend some time thinking about where it all went wrong; this is important, because you need to know where it all went wrong in the first place. Once you’re aware of the issue, you can prevent it from happening again.

 

Write a list

 

The next step that it’s wise to take is to sit down and write a list of what your financial problems actually are. It’s easier to see things more clearly when they’re written down on paper, so doing this is most definitely worthwhile. Sit down and write a list of your financial issues; create a tick list that clearly shows every problem that you have financially. It’s also worthwhile totting up any debt that you have, so that you have all of the information that you need in one place.

You may feel shocked by the amount of debt you are in or how many financial issues you have but try to take a positive approach to the situation. Think about the fact that you are facing the issue head-on, which means that you can now start doing something about the problem and will soon get your life back on track.

It will take time but at least you aren’t burying you’re head- you’re taking a more proactive approach.

Work out what you owe

 

Call each of your debtors and ask them exactly how much you owe, add this to your running total of debt. It’s easy to see large figure and panic about it, but it’s best not to panic. Instead, stay calm and take the outlook that at least you’re on track to get your debt problem resolved.

The reason it’s so important to see exactly what you owe is that you can’t effectively chip away at it if you don’t know what the amount is. That’s why it’s best to get a total figure so that, over time, you can slowly but surely start knocking small amounts off of it and getting your finances back on track.

 

Get Support

Being in debt or struggling financially can have a huge impact on your mental health and wellbeing, which is why it’s a good idea to speak to a financial support charity. If you aren’t able to cope- or are finding coping difficult- then you may want to speak to a support charity to get some help and advice.

There’s plenty of support available, from anonymous online or telephone support to therapy sessions and group support sessions. Whatever support you need, you should be able to gain access to it.

If you’re not sure where to start, the best places is probably Google. Search ‘financial support charities’ and see what comes up – you’re sure to be met with a list of local and national charities that are available to help you get your finances back in shape while helping to improve your mental health and wellbeing at the same time.

Have a plan?

The most important step that you can take to get your finances back on track is also one of the most simple: make a plan. If you want to change your circumstances and get things back on track, it’s vital that you make a plan of action. If you require help making a plan of action, take the time to speak with a friend, loved one, or your therapist, and ask them to help you.

Start by calling each of your debtors and explaining the situation. Ask them how they can help you and what kind of repayment plan they can offer, and go from there. Just make sure that any payment plan you agree to is affordable, as you don’t want to fail to make the repayments as then you’ll end up in more debt.

If you feel like it would be easy to clear your debt if you only had to pay back one debtor, you could look to consolidate your debt. While there is the option of getting a debt consolidation loan, it’s probably better to take out a ‘normal loan’ such as guarantor loans from Buddy Loans, for instance. This type of guarantor loan could be ideal for you as it covers all of your debts, allowing you to pay them off, and then you’d only had one debt to pay back each month which would be to them, making managing simpler.

The next step is to look at your incomings and outgoings and work out what you can afford to spend each month on each aspect of your life. You need to ensure that you never end up in this kind of mess again, which is why it’s important to work out what you earn and what you can afford to spend. You can download an income and expenditure form from the Internet to use for this, to make working out what funds you have to live off, a little easier.

There are also apps that you can download to use for this, that can help you manage your money more effectively. These apps allow you to enter your bank information and create an income and expense form, and then allows you to set monthly spending limits. The beauty of these apps is that they alert you when you’ve spent too much more or are getting too close to your limit, to help make managing things easier.

 

You can do this

Being in a sticky financial situation is never nice, and it’s incredibly easy to get so overwhelmed that you quite literally don’t know what to do. However, what it’s important to remember is that being in a financial mess doesn’t have to mean that your life is going to turn upside down. It might be hard at first to cope but the tips above should help to make the process of managing the situation a little easier.

It won’t be easy getting things back on track but it’s important to understand that it is possible. If you take note of the tips and advice above, you can easily make changes to your financial situation. It will take time for these changes but if you persevere and take note of the tips above, you can change your financial situation for the better.

It is possible to make changes and overhaul your finances completely, even if it doesn’t feel like it right now, so try and stay calm and focus on the fact that you can change things for the better.

 

This post is for educational purposes only.

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0