Ten Steps To Take When You Are In Financial Trouble

Ten Steps To Take When You Are In Financial Trouble

This is a guest post from The Shark Investor. The Shark Investor shares his thoughts on an active approach to passive investing. This includes constant hunting for good aggressive opportunities for generating high returns on your assets.

Does a shortage of money make you feel paralyzed? Seeing yourself in a deep financial trouble is quite a stressful experience–a cold shower which can freeze your willpower to get out of it. But if you don’t take action, you are just like a drowning man who does not try to save himself. Sooner or later you’ll reach the bottom.

Don’t give up, but swim! If you take immediate action, you will be able to get out of the trouble. Here are ten things you must do if you want to overcome your financial troubles:

1. Face the problem. People tend to deny situations they don’t like. But closing your eyes in front of the increasing debt figures will not make them disappear. The first step to solve the financial trouble is to recognize and admit there is a problem. If you are doubtful, check out these 24 signs which will help you get a full picture of the situation.

2. Create a plan. Create an action plan with numbers and terms outlining when and what to do. The next steps in this article will suggest you some of the targets in this plan. Print it out and stick it on the wall or on your desktop. Just having the plan will not solve your problem, but will get you much closer to taking action.

3. Cut the unimportant expenses. Once you have realized that you are in trouble, don’t be shy about it. Cut any expenses for dining out, going to expensive bars with friends, shopping, unnecessary home improvement, and all that. A harsh problem requires harsh actions. You will get back to doing your favorite things once you get out of the slough. The harsher you act, the sooner you’ll emerge from your troubles.

4. Stop using credit cards and taking loans. The biggest mistake people in trouble do is to take more and more loans and to purchase more things on credit. This is a counterproductive approach and you are just adding fuel to the fire. You need radical solutions, and one of them is to stop borrowing money.

5. Negotiate your loans. The debt you already have will not disappear. And since you are already in trouble, it’s probably hard to pay everything on time. Try negotiating for better terms. Promise yourself not to take on any more debt until you put the current debts in order.

6. Sell some stuff. How bad do you need to fix your financial situation? You may think selling your car or selling your home and moving into a smaller one is a disaster, but picture yourself broke. If you have made the wrong decision of buying too many, too big, or too expensive things, now you have the chance to fix them. Fortunately we live in a free market and everything can be sold. You can always buy items again when you are in better financial shape. But I bet next time you’ll plan the purchases better.

7. Work more. It is probably obvious, but earning more money may help you execute your plan faster. Remember, your struggle will be temporary, so give it everything you have. Picture yourself and your family happy and secure again, and you’ll have the motivation to take on some extra work for 3, 6 or 12 months. If your current job does not offer options for extra work, get additional job, do some work from home freelancing, or even get a second job.

8. Ask for raise. What’s the worst thing that can happen to you if you ask for raise? To be fired? If there is really a risk to be fired just for asking, you’d better leave that job anyway. The worst thing that can really happen is your request to be rejected. Then why don’t you try? If you are in a financial trouble there is no better time to ask than now.

9. Ask friends and family for help. Doing this may be your last resort. If you have developed a habit of not relying on friends and family, you have probably not asked them for financial help so far. So, now is the time to do it–only once. If loans from relatives are already part of your trouble, forget about asking for more.

10. Track your progress. If you keep track on your progress, you’ll be motivated to do better and better with your efforts. Keep notes about the savings you make, the debt reduction, and the additional income you earn. Talk about it, blog about it, and let others encourage you. Enjoy each small improvement to your financial situation and build upon it to tackle the next goal.

You shouldn’t be ashamed of being in financial trouble. It happens to the best of people, and just a few innocent mistakes can quickly spiral out of control. The worst thing you can do is to deny the situation and make no effort to solve it. Pull yourself together and attack the problem with the sometimes drastic and radical measures required, and you’ll be in a better financial situation before you know it.

For more from The Shark Investor, be sure to check out the site, or subscribe to a feed.

Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.

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