I have met a ton of people who are experiencing the harshness of the following two key items:
No Plan, No Savings, Piles of Debt
Loss/Reduction of Income
Here is what you can do when faced with this situation.
Allow Yourself to Feel, Then Act
It's natural to feel overwhelmed and regretful when facing a significant financial challenge. Take a moment to acknowledge your emotions and give yourself permission to process them. It's okay to feel this way—it's the first step in moving forward.
Prioritize Your Payments
When finances are tight, prioritize who needs to be paid first. Essentials like housing, utilities, and food should take precedence over non-essential expenses. Create a list of creditors and bills, and decide which ones must be paid immediately and which can wait.
Set SMART Goals
To regain financial stability, set Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) goals. Whether it's paying off debt, saving for emergencies, or increasing income, clear goals provide direction and motivation.
Create a Written Spending Plan
Even if your income and expenses don't balance perfectly right away, a written spending plan is crucial. This plan helps you understand your financial situation better and identifies areas where adjustments can be made. Knowing your "Go Get This!" number—the amount needed to cover essentials—empowers you to take control.
Take Action!
The most crucial step is to take action. Start implementing your plan immediately, whether it's cutting unnecessary expenses, seeking additional income sources, or negotiating with creditors. Small steps taken consistently can lead to significant improvements in your financial situation.
There can be a tendency to just focus on #1 and hope for everything to just work itself out. Usually, this is not the case. Recovering from this type of issue is emotional and gut-wrenching, but it requires one to take action.
You CAN recover from the mess.