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What To Do If A Personal Financial Crisis Hits You

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If you’ve suddenly found yourself in the middle of a personal financial crisis, you’re far from alone. Almost everyone goes through this at some point in their lives; circumstances can change overnight, and what once seemed like a surefire source of income can dry up instantly, leaving you without a consistent way to survive.

When this happens to you, the most important thing to do is to face it head-on and not to run away from it. The fact is that there are plenty of things you can do to alleviate the worst aspects of a significant financial shortfall. Without further ado, let’s take a look at what you should do if a personal financial crisis hits you.

Don’t panic

The first and most important rule of facing any financial problem is not to panic. By panicking, you increase the risk of making unwise decisions that might actually hamper your financial health instead of helping you. We know that your first instinct might be to feel overwhelmed by what’s happening, but instead, try to sit down and take stock of the situation in a holistic sense. Talk to your family and friends and see if you can get their perspective on your problems. You never know – your money worries might not be as serious as you thought!

Think about income streams

It might sound obvious, but you should start thinking about how to bring in some extra income as soon as you possibly can. If your money worries are short-term, then you have several options; bad credit personal loans can help lift you out of a tight spot when your credit rating isn’t great (and that’s a very common problem), and there are several other kinds of loan available too. You could also think about selling things you’re not using, or enlisting the aid of friends and family to temporarily inject a little cash into your bank account.

Identify the underlying cause

Every troublesome financial situation has a cause underpinning it. Maybe it’s wanton spending, or perhaps there’s something else in your life that’s causing you to haemorrhage money. Whatever it is, it’s important to perform a thorough, honest audit of your bank account so that you can see where the problem areas lie. If you need to, don’t be afraid to bring in external help (although, for obvious reasons, it may be best to try not to pay for it). Sometimes, the worst person to examine your finances is you, because you won’t look at the situation with a critical eye.

Create a budget

Once you’ve isolated the cause – or causes – of your financial woes, it’s time to get proactive. Craft a budget that takes into account everything you’re bringing in and everything that’s leaving your account. Categorise everything as essential or non-essential, then start the cull. Work your way down the non-essential list and, being fairly brutal with yourself, start cancelling subscriptions or pledging not to buy the things that aren’t completely essential to you right now. You’d be amazed by just how much you can save through doing this!

Try to negotiate with your debt providers

If you find yourself in debt, then try to reach out to the people to whom you owe money. Most of the time, providers will be amenable to negotiations (that is, of course, if they’re entirely above board), and you can often secure a more favourable rate of repayment, even if it’s only temporarily while you get back on your feet. At worst, you’ll be told that any renegotiation is impossible, so you have very little to lose (although being told such can be demoralising). The more you talk to lenders, the better chance you have of getting out of your debt.

Consolidate loans and debts

We know it’s become a bit of a hackneyed advertising cliche, but it really is a good idea to consolidate all of your existing debt into a single loan. This way, you’re not constantly scrabbling to remember what repayment goes where, and you can plan around the single expenditure that leaves your account every month. It’s important to calculate your new debt rate in advance, though, so that you don’t actually end up paying significantly more than you would have if you’d just left everything the way it was. Good debt consolidation is a solid idea, but bad debt consolidation can hurt you.

Take on a side hustle

If you think you have the mental capacity for it, a second job (or side hustle) can be a great way to shore up a little more income. The benefit of a side hustle is that it doesn’t necessarily have to further your career in any way, so if there’s ever been a job you’ve been interested in that is a little more quirky or offbeat, this could be the perfect chance to try and pursue that opportunity. If you’re working a day job, you should try to make sure your additional job doesn’t eat into your free time too much, as this could leave you feeling burnt out and too stressed to work either job.

We hope these tips on how to lift yourself out of dire financial straits have been helpful. Of course, there’s always lots more you can do, but a lot of your options will come down to your specific financial situation, so only you can really know what’s best for you!

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Sean Jacobson

I'm Sean, a former HR and business consultant providing you insights into the business world for Leader to Leader.

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