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One of the most horrifying experiences for me was struggling with money and not being able to pay my bills. The fact is that there are many people and families who are experiencing some very difficult financial situations.
Although there is no magic pill or “one size fits all” method to fixing financial struggles or “financial dis-eases,” based on my experience with financial struggles, here are a few tips to help you get started.
Tip # 1: Assess the Problem
The most important step is to assess why you can’t pay your bills. This could be because of a job loss, a pay cut, increase in fixed expenses, unexpected medical bills, an expensive mistake or poor spending habits. After understanding the cause of the problem, the next phase of this step is to write out your budget. You may see that you are spending more than you make. By writing this down in detail, you will understand your fixed verses flexible expense.
Tip # 2: Fix the Problem
Once you understand what the problem is, you can now begin the process of fixing the problem. Most of the time problem is overspending. If this is your issue, the best cure for this financial dis-ease is financial abstinence by eliminating the use of credit cards or unsecured lines of credit. Also, cut back on eating out and reduce or eliminate flexible bills like cell phone, land line phone, cable or any other unnecessary expenses.
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However, many people aren’t overspending at all. They may not be making enough money and their income does not meet their baseline budget of their fixed expenses. If this is your issue, it is now a matter of increasing your income. Finding a part-time job or establish a home-based business can generates that extra income needed.
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Here are few more ways to handle challenging financial situations:
Ask your family or friends for a loan or gift to assist you during your short-term struggle.
Make sure that you only ask them once and make it clear that it is a gift (you do not have to pay it back) or it is a loan (you will pay back). If it is a loan, establish the payment arrangements and make sure you pay them back on time. Don’t be that family member that everyone ignores phone calls from because they know you are just going to ask them for money.
Contact your creditors.
Contact your creditors to explain your temporary financial hardship and request to skip a payment for the month to get back on your feet or to modify your payments, permanently or for a limited time. Many financial institutions have a loan modification program.
Contact a debt management organization, like CCCS.
Contact a debt management organization, like Consumer Credit Counseling Services (CCCS) to assist you with communicating with your creditors to reduce your monthly payments. There are many organization out there, some free and some with a minimal fee. Be sure to do your research before you commit to their services and program, especially if they are requiring a fee up front. It is recommend that you find a non-profit debt management organization that does not charge a fee to assist you.
Learn your legal options.
When all else fails and you have honestly tried everything stated above as well as other tips you’ve learned, another last resort option may be bankruptcy. “Bankruptcy is a tool, nothing more, nothing less” says Bankruptcy Attorney & Trustee Angelyn Wright of The Wright Law Alliance, P.C. When used appropriately it can be the financial major surgery necessary to rebuild your financial well-being and give you a Fresh Start. If you are considering this option, make sure you understand what bankruptcy is and does. When done the wrong way or with the wrong attorney, it may put you in a worse financial situation than you are now. Get educated and ask questions before you proceed with caution.
Based on personal experience, as well as observing and working with others who are dealing with and have resurrected from financial struggles, your financial situation can change if you are willing to work hard enough and can be disciplined.
