It’s no great failing in life to be in financial turmoil. It may seem like it is, when every pressing consideration is threatening to take away your assets, or to saddle you with low credit for a while. But one thing to keep in mind is – you can always heal from bad financials. It may take some effort, some sacrifice, and some commitment, but it can be achieved.
In other words, financial difficulties do not define you as a person. The moment you understand that, the more likely you will be to take your head out of the sand and start focusing on what you need to. This can sound easier said than done. But if you achieve it, you might find yourself making those small incremental steps that help you overcome your problems and learn new techniques to better handle your financials in the future.
So – how can you get back to grips with your finances? In this post, we hope to discuss all of that and more:
Identify Your Obstacles
It’s true to say that sometimes, financial health is a reflection of our priorities and our spending needs. This isn’t always the case of course, it’s common for people to experience financial difficulties that were totally out of their control. In fact – it’s more likely for this to happen then for your financial issues to be something that you entirely engineered yourself. The rising cost of living, gentrification, low-paying jobs, and the associated costs with healthcare can pile up on someone. It just takes a little bad luck.
That said – what does help is figuring out exactly how your practice management might be contributing to it. That doesn’t mean chastising yourself for trying to maintain a standard of acceptable living, as you deserve. But perhaps there are expenses that you could cut, or obstacles you could consider in order to help soothe your situation.
Perhaps there are expenses you can cut with lifestyle changes, such as saving money by working on a smoking habit – negotiating on some of your utilities (such as lessening your internet plan allowance), and whatever else is realistic and acceptable.
It might be, for instance, that you have a number of credit cards and have gotten into the cycle of paying one off with another. That might have been a solution to begin with, but now that becomes a liability and something we need to address.
How might we move past that obstacle? Consolidating your debts where appropriate, speaking to a charity and making sure your priority charges are negotiated with a worthwhile payment plan can be key. This way, you make progress, and one obstacle need not remain something you worry about.
Consider Your Credit Report
It’s important to consider your credit report where you can. A full credit report sheet can help you identify which accounts you have open, which are closed, which creditors are looking for the settling of accounts, and what issues, such as not having a replete address history, may be contributing to a lower score.
In some cases, you may also be able to find credit card applications that you’re likely to be approved for, especially as that relates to building your credit again with a starter card. While your credit score will be rated differently depending on the agency you use, it can be healthy to keep an eye on this and to try to tie up some of the issues weighing you down.
Consolidate Debts Where Appropriate
It’s important to consolidate your debts if you can. Often, a charity will be able to help you do this, perhaps even unifying all of your debts into one payment. This can help you manage the stress of having to deal with a range of creditors and instead make sure you’re hitting a regular and worthwhile monthly payment.
From there, the charity can help prioritize those debts to make sure you keep making dents in the figure, rather than only paying for expenses. With such aid, you may also be able to limit additional interest charges or late fees that may have been building and smothering you beforehand.
Budget Your Income & Expenditures
It’s healthy to make sure that you have your income and expenditures perfectly listed. Just make sure your budget is crystal clear, down to the penny. This way, you can make absolutely sure that your spending is being reviewed as appropriate rather than something you just keep in your head.
This is a great habit to get into regardless of your financial health, but especially when your finances are strained. You can use free note taking apps like Evernote to construct month-to-month tables, or subscription-based services like You Need A Budget to make this even more simple. This way, you can even stipulate the small daily charges you gain such as public transport or coffees to wake you up in the morning. A good balance like this can help you move forward with a real sense of what you should be spending. When you’re aware, it’s hard to fall back into the bad habits you may have had until now.
Speak To Your Tax Authority
If you’re having financial issues, then it’s worth considering what tax you may owe. Often, your tax contributions are taken as a necessary expenditure out of your paycheck automatically. That said, if you’ve been earning money in a self-employed capacity, then it might be that your financial issues also relate to your reported earnings and what contributions you need to make. It might be that you have penalties to deal with.
Speaking to an accountant or tax specialist can help you with this. They may be able to contact the tax authority on your behalf, manage your account, and help you work through past earnings so those past declarations will be rectified. Tax should be your priority, because this serves as a non-negotiable payment.
Make Sure Your Priority Bills Are Handled
Any creditor will ask if you are able to meet your priority bills before paying them back. It might feel good to make massive financial headway with your debts, but if you’re unable to pay rent, bills, or vital amenities you need to live comfortably, then that’s no progress at all.
Always make sure you’re giving yourself an acceptable standard of living (despite having to lower your living standards somewhat in order to save money). Some people in debt can overshoot this, and end up causing themselves personal issues or health problems based on the stress and discomfort of trying to meet their obligations. That’s no solution at all.
Sell Off Unnecessary Assets
To the degree that you can, selling off unnecessary assets can help you make some headway towards your financial goals, and give you a momentary reprieve. Make sure they’re not essential belongings you need. A vehicle, for instance, might be essential to get you to work and back, and should be part of your priority spending.
That said, if you’re driving a Mercedes S-Class, then perhaps this can be sold in exchange for a cheaper vehicle to both drive and run. The same goes for larger assets you may have, such as owned real estate outside of your home, and more. There’s a reason that certain businesses liquidate their assets in order to meet their financial responsibilities from time to time – to a lesser extent, people do this too. You may find that identifying which can make sense will help you.
Consider Further Income Measures
It’s cold comfort and not always helpful advice to give – but sometimes, it’s worth thinking about what extra income possibilities you may have access to. While you shouldn’t work yourself to the bone or risk unhealthy productivity, it might be that offering to do overtime, or in some cases, taking on extra work, can be a good way to accelerate yourself out of bad financial habits.
Remember though, some debts may be a sign of being already stressed. The last thing someone already shrouded in debt and in need of trying to get their foot back on the ladder needs is finding a second or third job. As such, take this advice with a pinch of salt and ignore it if it’s not applicable to your situation.
Understand How To Build Back Your Credit
Building back credit can be a great way to slowly give yourself more affordability and heal your past financial mistakes. Loans for bad credit online can sometimes be found, as can starter credit cards for low credit that charge higher interest but can give you the means of slowly making your payments and strengthening your reliability again.
Finally, it’s important to keep hope and realize that over time, you can walk your way out of difficult financial situations. No matter how difficult times might seem now, you can certainly make the best of things and learn lessons anew. You won’t be the first person in financial difficulty, and you certainly won’t be the last.
With this advice, you’re sure to get back to grips with your finances.