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Money Wise

Money Wise

The Three A’s: Surviving a Financial Crisis

EVERYONE’S credit has bumps and bruises, and more people than you think have experienced a financial crisis whether it was something unexpected or of your own doing. You CAN recover. You CAN buy that house. You CAN have a life without collections calls. So, let’s talk…

The First A: ACKNOWLEDGE

The first step to solving a problem is actually admitting there is one. Money is probably one of the most intensely private and volatile topics of discussion. No one wants to admit their financial mistakes much less talk about them. Having said that, buck up and grab a little courage. Contact your creditors right away. Be honest with them and explain your financial situation. Ask them for solutions such as deferring payments, setting up a reduced payment plan, or possibly refinancing a loan to help take off the pressure. Your creditors will likely ask details about your financial situation, so have your monthly income and expense information on hand when you call them. Ignoring the situation and hoping they will forget about your debts will only make your situation worse.

The Second A: ATTITUDE

At some point, almost everyone experiences an unexpected crisis that rocks your financial world. It could be losing your job, getting a huge medical bill, or having your car break down at the worst possible time. The most important step you can take in this situation is to STAY POSITIVE and don’t lose faith in yourself. As difficult as it might be to put a financial crisis into perspective, it’s critical. Even if the crisis is of your own making, gracefully accept that you messed up and take control. Millions of people have gone through similar financial disasters and survived – you will too.

In fact, use this opportunity to strengthen skills you have or explore new areas. Think in terms of professional education to either advance to a higher skill level against a positive shift in the economy. Alternatively, you could consider this an opportunity to explore other talents you may have or look for opportunities to volunteer your services. So many non-profit organizations face budget cuts and other crisis that your time and energy might help them overcome their challenges. Plus, it feels really good.

The Third A: AVOID

In a financial crisis it’s a good idea to avoid using any credit cards you might have. It’s tempting to swipe your credit card when you’re short on cash but you’re not doing yourself any favors by racking up additional debt. Cut off your tools for easy spending. In other words, take your credit cards out of your wallet or purse and leave them at home when you go out. Similarly, delete your card numbers from online accounts.

How Long Will It Take?

The length of time needed to recover from a financial crisis really depends on how bad the situation is to begin with, and how disciplined you are on sticking to your recovery plan. Consulting a financial advisor can sometimes be helpful. They can help you consider solutions to clean up the problem and make sure you never have to deal with it again.

“Commitment is what transforms a promise into reality” – Abraham Lincoln