Full-blown financial emergencies, as well as minor setbacks, are all a part of life. At some point, practically everybody you know will have been through a similar experience where they were running on empty, often through no fault of their own.
Financial hardships will happen. But what makes the difference between a successful recovery and a recovery that goes nowhere? Let’s take a look.
Bouncing Back Requires A Problem-Solving Mentality
The difference between people who fail to deal with their financial difficulties and those who succeed is that successful people aren’t afraid to face financial challenges head on. According to Kyle Taylor, the editor of the personal finance blog, The Penny Hoarder, it’s important that people develop what he calls a “problem-solving” mentality. In practice, that means doing everything you can do address the problem and restore your financial health. For some people, that means going to injury lawyers to recover money if they were injured at work or in a car accident. For other people, it means confronting things like addiction or gambling, he says. Look for additional streams of income at the same time as slashing your costs.
Grab A Money Mentor
When you’re in the midst of a financial crisis, it can often feel like it’s impossible to escape. Not so, says Josh Felber, a businesses and wellness coach. He says that coaching is one of the best ways to confront feelings of hopelessness when it comes to money and to start putting yourself back on the right track.
Mentors, he says, serve two purposes. The first and most obvious is to provide you with advice about what you can do to reduce the difference between your income and your expenditure. But mentors also have a second purpose: to provide emotional support to help people get through difficult times and carry out their action plan. The best mentors keep you accountable and track your decision-making.
Target Credit Card Debt
According to Nicole Lapin, author of Rich-Bitch: A Simple 12-Step Plan for Getting Your Financial Life Together, the first place people should target should be their credit card debt. Credit card debt, she says, is the most expensive way to borrow. Sometimes you’ll buy a pair of socks on your credit card for $5, but they’ll end up costing you more than $50, thanks to all those interest payments.
Lapin’s advice is to take away from your “fun” money pot first so that you can double down on paying back your credit card expenses. She also suggests selling everything you don’t need online as a way to make extra money on the side.
Have A Forward-Thinking Attitude
Making a plan and having a forward-thinking attitude are two essential ingredients for achieving financial success, according to Chris Hogan, an expert on retirement finances. He says that everybody has setbacks, but it’s those that build a plan to overcome those hurdles who win in the end. He suggests treating building a setback fund as a project in itself and turning it into a goal.