Financial Disasters | 5 Ways to Tame the Storm

Whether hit by the recent stock market crash, housing market plummets or international banking disasters or having amassed insurmountable debt the traditional way through medical bills, divorce settlements, education bills or general overspending, more people than ever are finding themselves in the midst of a personal financial crisis. But there is a way to come out the other side of the storm and it comes in 5 stages.

Lightning Strikes

Image courtesy of swamysk from Flickr

1 – Take stock

After realising and accepting that financial trouble has come a-knocking, sitting down and looking at what is left over, what is owed and what is gone is essential, this will help create focus when a comeback plan is formulated and ensure there is understanding of what needs to be cut back on to make things work. Write down the assets still owned, current income if there is one, credit score, monthly expenditure and anything that may arise in the future such as medical bills and retirement plans which could also affect the plan for recovery.

2- Setting a goal

The next step is to work out and define a clear aim for the plan, be specific about the kind of money desired and by what date, this is no time for vague wishes to simply earn more. Along with a goal a detailed plan of progress must be set up, this ensures staying on track and being able to feel emotional satisfaction when smaller goals are reached on the way to being free of whatever financial disaster may have fallen in the way.

3 – Be Realistic

This applies to time, and the plan’s aim, both of which should be honest and realistic. It sounds simplistic but setting unrealistic time-frames and aims for re-growth will only disappoint when they are not met, making set-backs and comfort spending binge’s all the more likely.

4 – Track your progress

One of the biggest mistakes to be made from regeneration after a financial crisis is not monitoring progress. It becomes harder to track how well things are going and whether adjustments need to be made if no one’s watching the bank balance, it may be a scary thought checking in every week or day even but it’s worth it to whether the storm.

5 – Make adjustments

Be prepared to make changes to the plan, rigidity is a recipe for disaster when it comes to money because there is always something around the corner which will throw even the best laid plans to waste. If an unsuspecting bill is necessary factor it into the process; this may mean, making cut backs the following month or simply altering the goal timings – think long term here.

When all is in place the road to recovery starts, that’s not to say it’s an easy one but at least progress is in the making for a full recovery from financial disasters. Whilst adhering to the goals and plan set out it might also be a good idea to create a contingency plan or set up an emergency fund savings plan, just in case the situation arises again.

Author | Amie is a personal finance expert within the payday & short term loans industry, working on leading sites like www.wonga.com.  In her spare time she enjoys understanding the personal loans market.  

Tim Esterdahl

Tim Esterdahl is the editor of IFCS blog. He is a married father of three and enjoys golf in his spare time.

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