No one wants to experience financial challenges in life to the point that consumers try to make the right money decisions whenever they can. But regardless how hard people try, there are some situations that is beyond the control of consumers and the best they can do is ride it out. They can only prepare so much but life can do a number on their finances.
Financial problems are something people need to address as soon as it comes. There are some who puts off focusing on a solution for days and weeks and even months only to find out their problems have multiplied over time. It can be a credit card bill that was intentionally overlooked until such time that it has already dragged down their credit scores and ballooned to unmanageable amounts.
It can even be a student loan that they feel did not need to be paid back and comes back with garnishment on their wages and even their tax refund checks. It is one of those debts that will rarely go away and is not even easy to discharge even in bankruptcy. Consumers need to make sure that they never forget a debt account.
But there are times that they just rack up just like how Nerdwallet.com reports on the averge credit card debt of consumers reaching about $15,000. Student loan average debt is also over $32,000. Those are big averages in today’s time when you consider the average salary and the consumers who are still reeling from the 2008 recession.
Penniless and learning
WSJ.com shared that there are a lot more Americans who are putting on debt at a slower pace during the third quarter of 2015 and that is a good sign. But even with these, the possibility of experiencing financial challenges is still a possibility. Here are some takeaways consumers can get from undergoing hardship with their finances.
- You learn to live with bare necessities. When your back is against the wall, you need to push back with whatever you have and when you have financial problems, you don’t have a lot. When you don’t have a lot, you learn to use what you have and make do with what is available because you do not have any option. If you only have a very tight budget for food for the month then you would need to say no and decline those dinners with friends. If you cannot afford to buy a new television set then make do with what you have.
- You go back to basics. Financial challenges pushes you back to square one. If it means losing your job then you go back to job hunting and sending out your credentials just like before when you got out of school. If you lose your house because you lender takes it back then you start all over again and look for a new one when you get your finances in order. One advantage to this is that you already know how it feels like to go back to the drawing board because you have been there before and you can do it better the next time around.
- You get to analyze important areas of your life. When you are left with almost nothing and you need to forge ahead, you are forced to prioritize the important areas in your life. Suddenly those trips that were planning to make or that sailboat you longed for seems ridiculous at this point. You prioritize basic necessities like housing and food and looking for a job. It forces you to make sure that your basic needs are covered before you delve into those wants.
- You see who your true friends are. This is one of the advantages of falling on hard times because you get to know who your true friends are. There are a lot of types of friends and at some point in your life you will attract the wrong ones. And as long as you are able to give them what they need, they will stick to you. When the time comes that you can no longer provide what they need like money when you get into financial challenges, they will disappear. This is one benefit of getting into money trouble, you get to know who your real friends are. They are the ones that stick by you whatever the situation.
- You get the chance to reflect on your mistakes. Some schools nowadays get to use what they call a reflection chair on kids. When the kids does something wrong, some teachers ask them to sit on it to reflect on what they did wrong. The same idea can be used when you make financial mistakes minus the chair. You can reflect on some credit card basics without having to go in debt. You can reflect on what your purchases were that lead to your financial demise. You can then make a mental note to avoid them the next time you are presented with the same options.
Climbing back up
The next thing you need to look at after understanding the upside to financial problems is to climb back up to being self dependent when it comes to money. Here are a few things to consider when trying to climb back up.
- Get your finances in order. You need to take control of your household budget to be able to climb back up. You need to sit down and assess your income versus what you are spending on a monthly basis. The idea is to make sure you have more than enough to cover your expenses and that you can pay for them in a timely manner. This is one of the factors often overlooked by consumers resulting to missed payments. The payment schedule and cash flow are some of the more important aspects of your finances other than the income.
- Put in safeguards. Statisticbrain.com shares that the average savings of an American family is just around $4,000. That might be enough for some financial emergencies but this is not only the safeguard you need to be able to climb back up. Your reserve funds consists of two things – rainy day fund and emergency fund. The bigger financial challenges such as losing your job or a severe medical need, you would need to depend on your emergency fund. For those smaller emergencies like a minor car repair or broken microwave machine, you can use your rainy day fund.
- Stay away from unnecessary debt. By now you should have learned your lesson and know what led you to financial trouble. It does not end in knowing what they are, you need to make a commitment to stay away from those mistakes.
Financial challenges will always be a part of your life and it just differs on how much impact it makes. There are small problems that can easily be addressed by your reserve funds but there are crippling situations where you feel you cannot get up anymore and move forward. There will always be solutions to your financial problems and it is just a matter of finding them and getting out of your situation. There will never be a problem you cannot get out of and they are just designed to make you stronger.