Financial setbacks happen. Even the most cautious of consumers have been caught unaware by an unexpected bill, the loss of a job or other emergencies that turn their careful financial planning on its ears. The setback itself isn’t as significant as how you respond to it when trying to make a comeback. These are the things you need to keep in mind when trying to dig your way out of a financial setback.
Assess Your Situation
Before you can begin to recover, financially speaking, you must first thoroughly understand the ramifications of your setback. Most of the time, the source of your financial reversal is something that was entirely beyond your control. Even when you do not have control over the cause, you do have control over how you address the matter. Start by determining just how far-reaching the consequences of this setback are.
You have to know what the big financial picture looks like before you can begin making plans to change your future and make a comeback. Obtaining a copy of your credit report is an excellent place to start. You can also see if there are any mistakes listed and clear those up as you work to improve your overall financial situation.
Find the Right Resources
The first thing to realize is that no matter how overwhelming your situation may seem, there are resources available that can help you in your efforts to recover. Your mission, at this point, is to find the right resources to help you figure out where you want to go next and then, how to get there.
One of the best resources to consider is a money mentor. These mentors can help educate you on the reality of your financial situation and the steps you can take to dig your way out of debt and make your economic comeback.
You do not necessarily need to spend money to find a qualified financial mentor. There are many excellent blogs and financial educators online who can help you find the resources you need to get your journey back to where you started and even into a better financial situation overall. That will give you a roadmap to follow that will cost you nothing to get started. You only need to establish a plan to help get you back on track.
Establish a Plan
That is one of the most important things you can do to begin the journey toward the financial future you had envisioned or even have had in the past. It would be best if you created a plan that you can put into motion to regain control over your financial situation. A few key things to remember when creating a plan include the following:
- Be specific. Have specific goals in a specific order. For instance, do not only say you want to pay off all your credit cards. Have a specific plan for which credit card you will pay off first (second, third, so forth); and how much you will pay toward that goal each month.
- Be realistic. While it is great to think you will spend every available dollar you earn toward eliminating debt, you have to leave some money for living expenses. Create a realistic budget. Yes, you will have to make sacrifices, but those sacrifices do not have to be all-encompassing.
- Set deadlines. Deadlines create a sense of urgency that encourages results much faster than “winging it.” If you do not have a set deadline in mind, you will meander on your journey to financial recovery forever.
Once you have your plan in place, it is time to create personal financial goals that go beyond merely recovering.
Part of making a comeback from your setback is to begin creating financial goals for the future. In your case, it can be something as simple as achieving a specific credit score by a particular time. Once you begin accomplishing some of the steps in your plan, like paying off some of your credit cards, your score will improve on its own. Once you have accomplished part of your plan, you can turn your attention to bigger goals and changes. The idea is always to create new financial goals to improve your financial circumstances.
A financial setback is just that — a step backward. Failing to recover and start moving forward, however, can prevent you from enjoying the comeback you so richly deserve. All of the above steps can help you immensely.