Moving Forward in the Face of a Financial Crisis

There are very few people fortunate enough to walk the roads of life without ever having a financial crisis. At some point, everyone will face some serious dilemma that leaves the accounts floundering. The good news is that you can recover from this, provided you know what steps to take.

Guilt is Useless – Leave it Behind

Guilt will only take you so far. At some point, you have to leave the guilt behind and focus on something more constructive. You can keep going over what you could have done in your mind, or you can start looking for things you can do now to improve the situation.

What’s done is in the past, and you cannot change it. However, you can start changing the future. Learn lessons from your mistake, and then prepare to make some changes in your finances.

Be Real – Even if it Hurts

Reality usually hurts, but it’s a necessary evil. If you never sit down and look at the bills or balance the checkbook after a tragedy, then you will only create a more dire situation.

Be honest with yourself and your spouse about the finances, and be honest about sacrifices that will probably be necessary. Make a detailed list of all your income, and then put together a list of all your expenses.

Don’t neglect to include annual fees like property taxes and utility bills that are only due once every three months. Subtract your expenses from the income to determine what your disposable income is. The less disposable income you have, the more serious your crisis is.

Make Sacrifices

The road to recovery will include some sacrifices. In the interest of increasing your disposable income and dealing with the crisis, you will have to make some changes. You can easily live without cable, and you may decide you really don’t need a home phone.

If necessary, consider moving to a more affordable place or trading the car in on something with a lower note. If your car is paid for or nearly paid for, then put off plans to replace it anytime soon.

Prioritize Your Life

A financial crisis can leave you with expensive reminders. Payday loans are great at the time, but they can become a burden if they aren’t paid off when they first come due. When recovering from a financial crisis, make paying off payday loans a priority. Taking longer to pay them off allows more interest to accrue, which can sink you into an even deeper financial hole.

When making your priorities, be sure to look at interest rates on loans. After payday loans are covered, plan on paying off those other high interest loans.

Budget Your Spending

Once you have faced reality about your finances, eliminated some expenses, and prioritized your debts, you are ready to write up a budget. Allow extra money for emergencies, so you can survive the next financial crisis that comes your way. Live by the budget, and your finances will gradually improve.

It doesn’t matter if the crisis is unemployment, illness, or some other emergency. When something happens that devastates your finances, you can recover. It will require being brutally honest with yourself about what you can and cannot afford, but you can survive this difficult time. Make the necessary sacrifices, prioritize your bills and take control of your spending. With dedication and patience, you will recover and enjoy a stronger financial position than before.

Guest author Sharon Koontz is a financial guru and freelance blogger writing on behalf of


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