Overcoming Financial Setbacks
Facing a financial setback? Take control by evaluating losses, tracking spending, using your emergency fund, focusing on small goals, and seeking help when needed.
A financial setback can happen to anyone. Medical emergencies, car repairs, job loss — when the unexpected happens, it can be overwhelming... but it doesn’t have to ruin your finances. Let’s break down your situation and create a manageable plan to get you back on track.
Step 1: Take Things One Step at a Time
Take a deep breath and start by evaluating how much money you lost or will need to pay. Remind yourself that you can overcome and take control of the situation!
Step 2: Track Your Spending
You’ll need to know your current income and expenses to create a plan and new budget moving forward. Look for ways to cut expenses like cancelling unused subscriptions or shopping around for better deals. Know which bills need to be paid immediately and see if you can find ways to reduce other bills.
Some options to reduce your bills may include finding balance transfer offers on credit cards to combine your balances with a lower rate, refinancing your auto loan, or negotiating a new price on your phone bill.
Step 3: Make Use of Your Emergency Fund
If you’ve built up an emergency fund, now may be the time to use it. Just keep in mind that if you do use your emergency savings, you’ll need to rebuild it for the future. This will help you avoid going back into debt if you face another unexpected expense or income loss. To help you easily rebuild your savings, use a debit card round-up program like Change it Up, to put money into your savings with every purchase.
Step 4: Focus on the Small Stuff
When you're overwhelmed by debt, follow the idea of the Debt Snowball Method — focus on small, achievable goals first while taking care of the minimums everywhere else. Use the small victories to motivate you toward accomplishing the bigger ones and — before you know it — the mountain that once seemed insurmountable is only a hill.
Step 5: Don’t Be Afraid to Ask for Help
Don't hesitate to ask for help. In a financial emergency, you can contact your creditors and lenders and ask for a payment plan, a lower interest rate, or a hardship program.
Remember, while you may face some challenges on your journey to Financial Freedom, that’s normal! Financial freedom isn’t a linear journey, and if you encounter a financial setback, you may find yourself going back to different milestones from time to time. But with a little dedication and hard work, you can take control of your finances and overcome any financial obstacle!