Financial recovery might not be a short trip for everyone. You jump on that path toward financial wellness with all of the best intentions, and that’s awesome. However, sometimes when walking along a path, you make enough small turns that you tend to lose your direction. You’re not completely lost, but maybe just a bit disoriented. Personally, I’ve been flat out bumping into trees……
Well, here’s a little slap in the face to wake you up and get you heading toward your intended destination. It’s just a reminder because we all need little reminders every now and again.
Evaluate your spending.
Take your completed expense/income list and identify the top priorities. Are there more than one of you earning and spending money in the household? Include everyone. Make this a family activity so that everyone is on the same page if changes need to be considered.
Compare total income to total expenses.
If there is more money going out than coming in, you will need to make changes. Take your completed list of expenses and identify the top priorities. Increasing income or decreasing expenses are the only two ways to resolve this problem. Easier said than done, but those are the facts!
Consider needs vs. wants.
You’ll want to cover basic needs such as housing costs, utilities, food, transportation and critical medications first. As you draw up your own unique list of what’s most important to you, you may also need to consider making some lifestyle changes. If in doubt, ask yourself – “Do I absolutely need to spend money in this area or is there some flexibility here?” You may not have to eliminate an entire area. Look for creative ways to reduce spending, such as getting movies and magazines from the library.
Create your new spending plan.
Create a plan for spending and bill paying that covers several months. Review and revise often.
Acknowledge that this is hard work.
Give yourself credit for doing a tough job! You are taking control of the situation. Financial recovery is not easy work. Just admitting that you have a problem and then stepping up to make the changes says a lot about you.
Don’t avoid talking to creditors.
If falling behind on payments is a sure thing, let your creditors know and inquire about any special hardship programs or reduced payment arrangements that may be available. Many creditors have programs in place that could help you.
Have a plan in place.
Most creditors respond positively when you present a plan to get back on track – even if it will take several months to do so. You want your creditors to know you take your responsibility to pay them seriously. Utilize your adjusted spending plan to help you put a plan together.
Payment arrangements should be realistic.
In the heat of the moment, you may feel like you need to agree to an arrangement just to get off the phone, but be careful. If you agree to a payment plan, it should be an amount that fits into your adjusted spending plan. Don’t make promises that you know you cannot keep.
Prioritize your creditor list.
Consider your Housing Costs Priority #1. There are many options for financially-stressed homeowners, but in all cases, you will need to work with your mortgage lender to find the right solution. If you are renting or leasing property, speak directly with your rental office or landlord.
The Bottom Line…
The bottom line is that we all need a direction to follow. Without one, you are just feeling your way around and hoping for the best. A good example of that is HERE. One of my earlier posts, where I’m trying to figure out what I’m doing wrong and how to make it right.
Don’t be too concerned about getting it perfect in one fell swoop. Things like financial recovery take time, and of course effort. As long as you stay the course, you will come out ahead.
Even if you have to bump into a few trees along the way……
Dave