One of the worst things that can happen in today’s day in age is suffering a financial hardship with no plan in sight. This isn’t to shame people who don’t plan – sometimes, things happen that are out of your control. In fact, only about 4 out of 10 Americans have an emergency fund.
Whether it’s being fired from your job, getting into an accident, going through a divorce, or a plethora of other stressful and traumatic situations, financial hardship is a burden that many may have to go through. As unfortunate as that sounds, there are steps you can take that will help you through this trying time.
Evaluate Your Situation
It can seem easy to just hit the panic button and immediately go to code red. Unfortunately, that can do more than good in your situation. The one thing you’re going to want to do is to sit down, open all those letters, look at your bills, and face your situation head-on.
Figure out what exactly is the cause of your situation; what was the catalyst that started this whole financial crisis in your life. Was it getting laid off from your job? Are you going through a divorce? Figure out what’s causing your situation and write it down. From here, you can then focus on tackling the situation head-on.
What do you think is more important: keeping your fridge full or maintaining your various tv streaming subscriptions? Not all bills are created equally and figuring out which payments are more important is going to be a situation you’re going to have to become familiar with.
The best thing to do is take a step back, remove yourself from the situation (meaning don’t make everything personally important), and figure out what’s a necessity and what isn’t. It may be hard to get rid of something that you’re used to having, but these aren’t normal times and you don’t have money to spare. There’s no point in struggling to pay for a necessity just to keep your monthly blind box subscription going.
One thing to remember is to look for things that you can cut out completely. Maybe you don’t need the most expensive satellite package or the best cell phone plan. Making a sandwich for lunch instead of going out for Happy Hour can save you quite a few bucks a month.
Make Sure You Take Care of Yourself
Yes, dealing with your financial issues isn’t going to be easy, but you also need to make sure that you take care of yourself. A survey conducted at the University of Michigan and the Genesee County Health Department found that when people experience financial hardship, they tend to cut spending on things that positively affect their health.
Cutting gym memberships, purchasing cheap foods that are nutritionally absent, and skipping doctor’s appointments are some of the more common ways people try to save money during financially stressful times. Unfortunately, doing so only adds to the negative health aspects of your stress.
This isn’t to say that you should splurge every day and pamper yourself to the extreme; rather, make sure you’re taking care of yourself during this time. Exercise (walking is free), eat well, make sure that you visit your doctor, and take any medications when you need it. Making yourself sick, either with worry or otherwise, will do you no favors.
Adjust Your Loan/Payments with a Hardship Letter
One thing you can do is write a hardship letter. This is like a lawyer’s brief where you let the lender know you want to modify your payments or sell your house on a short sale due to unexpected financial hardships. This isn’t a run-of-the-mill letter, however: it’s a serious document that lays bare all of your issues to your lender.
What you’ll want to do is find a sample hardship letter online. This is one of those things where you can just wing it; it’s an important document that can alter your situation to one that’s much more manageable. Having a sample letter or a template of one can make explaining your situation that much easier and give you a better chance of dealing with the lender.
The whole purpose of the hardship letter is to get a loan modification or get your out of your current financial black hole, not make the servicer cry. Don’t write a novel about your divorce or your broken back – explain your situation and what changes you want to be made to your loan.
Find Another Way to Make a Few Extra Bucks
This isn’t to say that you should kill yourself working four part-time jobs, but there are ways you can find a few extra bucks on the side. Likewise, you can take out another loan that will give you almost instant cash, but that can leave you with more payments. And if it wasn’t obvious: using credit cards can leave you in a bigger hole than you’re in now.
One option could be checking with your friends and family. Of course, no one likes having to ask for money, but that little bit you can get from a loved one can make all the difference. Don’t abuse people’s generosity either: all that does is burn bridges and leads you to further distress.
Finding a part-time job is also a viable option. Again, don’t overwork yourself trying to get back to where you were, but having a side job that provides extra money can help you make an extra payment or put food on the table. Just make sure you manage your time well.
The road to reclaiming financial stability is going to be difficult, but it is doable. Making sure that you take care of yourself, both physically and mentally, as well as tackling the situation head-on will help you confront the problem at hand. Inevitably, you’ll be stressed and unsure of what to do the moment your financial hardship happens but knowing what you need to do in order to get past this troubling time will make it that much easier.