Financial emergencies can happen to all of us, but getting out from the financial hole can be harder than you think. When it seems like you have finally started to make progress, something else brings you down. In order to get out of a financial crisis there are some steps you should take, which will can help in the present and the future.
Organization is key
If you want to get back to financial freedom, you have to first get organized and stay organized. Make a list of all of your debt and focus on which bills need to be paid first. It might take you a whole day, but make the time to sit down and really go through all of your finances. To efficiently work on paying back any debt, be sure to organize by oldest to newest. Also look at your monthly bills and determine which companies charge the highest late fee. Some people are so scared to call a business when they get behind on bills. Even making a simple phone call to see if a large, past due bill can be broken up, or if a bill can be paid at a later date without penalty, can be helpful in organizing your debts. The worst that can happen is they say no, and you rework your finances.
Get rid of reckless spending
When you set aside the time to organize, make sure you prepare a budget. Following a monthly budget is key to getting out of a financial crisis. You wouldn’t believe the amount of money you spend in a month on foolish things. Take a look at your bank statement and you will see how much you really spend on all the extras. In doing this you will see what you really could be spending extra money on that can help get you out of debt.
Getting rid of debt
Speaking of getting out of debt, this will probably be the hardest to complete when in a financial crisis. It is easy to simply say, get rid of your debt, especially when you don’t have a ton of money coming in, but have a ton of debt. Work on paying off debts with high interest rates because high rates keep adding up. In times of financial hardship, many look to their credit cards for help, which only adds to the financial crisis. If you are over the limit on any credit cards, try to pay off that amount first, while continuing to pay monthly. Do not continue to spend on your credit card, but rather work on paying off the balance in full.
Get your free credit report
Your credit can make or break you, and in a financial crisis, it is likely that your credit score dropped. For some this can be only a small dip, but for others it can mean going from a Good rating to a Very Poor rating. Utilize free credit report websites, such as CreditKarma. You are also allowed to receive your free credit score for all three major bureaus, each year.
Plan the future
Although it might seem like it will take forever to solve your financial crisis, things will get better if you take the right steps. Plan out how you can avoid a financial crisis in the future and look at the life lesson this financial crisis gave you. Setting financial goals for the future will help to keep you from experiencing another financial disaster.