A money crisis is tough, but everyone falls down at some point – it's getting up that matters. Here are the key steps on the road to recovery.
These are uncertain times. Jobs aren’t as dependable as they once were, and a serious illness can devastate your finances.
Even people who are well-prepared can make mistakes or encounter misfortunes that ruin their finances. It can happen to the best of us.
If it does, remember that this is not the end. Instead, it is the beginning of something new. People bounce back from disaster all the time.
Following are seven tips to help you regain your financial footing.
1. Accentuate the positive
Corny? Maybe a little. But make no mistake: Keeping your attitude upbeat really works. So does staying in the present. You’ll want to learn from your mistakes, but rehashing them endlessly keeps you from moving on.
In the same way, worrying about the future robs you of time and energy.
2. Seize control
Learning precisely where you stand in a crisis is painful. But there’s also relief in knowing what you’re up against. You can’t dig out until you know how deep your hole is. So, take the following steps:
- Get a grip by tracking your expenses.
- List all the bills you have to pay — rent or mortgage, utilities, insurance, groceries, car payment, gas and whatever else you need to cover to keep going. Add them up. This is the basic amount you need each month. Put your wants aside for the moment.
- Make a stripped-down spending plan. For now, include crucial bills only.
3. Get professional help
Pride has its uses, but paralyzing you isn’t one of them. If you hit obstacles you can’t get around, don’t waste time being stuck. Reach out to people with the expertise you need.
A trustworthy credit counselor, for instance, can negotiate lower rates and a debt repayment plan with your creditors, taking bill collectors and pressure off your back.
Find accredited credit counselors. Their advice is free, and debt repayment plans should not cost more than $50. Get any agreement in writing before paying a cent. Don’t hand over money before you’ve received services.
4. Beware of crooks
When it comes to credit problems, time is your friend. In seven to 10 years, even negatives as severe as foreclosure and bankruptcy drop off your credit reports.
Exercise has a surprising ability to keep your mood up, energize and focus you, and move you forward. In this TED Talk video, author and psychiatrist John Ratey explains how “physical exercise turns our brains on.”
6. Safeguard your housing
Call your landlord if you’re renting, and ask if you can make smaller payments for a few months until you can get back on your feet.
If you are a homeowner, call the mortgage company right away. Don’t wait to get into trouble. Most lenders have foreclosure prevention programs to help homeowners in crisis. The Federal Reserve also explains how to proceed with a lender.
7. Find additional income
While figuring out where life will take you next, you’re going to need money to keep the furnace on and groceries in the fridge. Tips for generating income include:
- Check with local schools to ask how to become a substitute teacher. Not all schools require teaching credentials.
- Launch a pet-sitting or pet-walking business.
- Start working from home. Get ideas by reading “10 Tips for Finding Legitimate Work From Home.”
- Consider house-sitting. Keep your rates competitive to get your business off the ground. Or do it free to get free housing. Here are three sites that offer to connect house-sitters with homeowners:
- Ask at schools about jobs as a bus driver, temporary janitor or kitchen aide.
- If you’re handy, set yourself up in business doing home repairs. Get cards printed up and post them on bulletin boards at grocery stores, hardware stores and community centers. Put your name out there for free on your local Craigslist (under “services”).
- Here are 50 more ways to scare up cash and “8 Weird Ways to Make Extra Money.”
Share your experiences of bouncing back from a crisis by discussing them in our Forums. It’s a place where you can swap questions and answers on money-related matters, life hacks and ingenious ways to save.