After two grueling internships, I finally made it. The days of living as a financial strapped college student were finally over, and I was on my way to living the good life. Or so I thought.
A few weeks later, I received an email stating that due to budgetary constraints, my job offer was no longer valid. Bummer.
Even worse, I now had an infant to care for, so this was definitely not the time to be out of work. The next few months were brutal, to say the least, but I eventually got back on my feet and managed to create an emergency fund in the process.
If you’re in dire financial straits, here’s what to do:
While this may be the last piece of advice you want to hear, it’s a must you completely withdraw yourself from the situation. Freaking out, wallowing in pity or venting to everyone who crosses your path will only exacerbate the problem and the volume of the voices in your head.
Take a stroll, visit the park or meditate to unwind. I found that exercising for at least an hour a day during this period of time was all I needed to de-stress.
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2. Change Your Perspective
If you keep telling yourself the situation will never get better, it won’t. By contrast, adopting a positive mindset is the first step towards getting unstuck.
I constantly repeated positive affirmations in my head; cheesy but very effective.
3. Devise an Action Plan
There is no one-size-fits-all approach to getting unstrapped. Start with these steps and tailor the objectives to your unique situation.
- Step 1: Assess your finances and set goals. If you don’t know where you’re going, it’s impossible to formulate a plan to get there. And even if you have an end goal in mind, not having a place of action will make it difficult to reach your destination. So take a moment to jot down your expenditures, income sources and goals you have in mind.
- Step 2: Give your creditors and service providers a call. Explain you’ve fallen on hard times and inquire about hardship options that may be available to you. These could include payment arrangements or extensions. Also, consider refinancing any outstanding loans to obtain a lower interest rate.
- Step 3: Cut expenses in moderation. Revisit your list of expenses and start making small cuts instead of going cold turkey.
- Step 4: Re-create your spending plan. Now that you’ve made cuts and renegotiated your obligations, it’s time to recreate your spending plan.
- Step 5: Use cash! I used the envelope system to help keep my spending intact.
- Step 6: Seek better job opportunities. Doing so will give your finances a slight boost and dig yourself out of the hole faster.
4. Start Saving
Saving in the midst of a financial emergency can be extremely difficult, it must be done to prevent history from repeating itself. Fail to heed my warning and you will dig an even deeper hole for yourself each a financial emergency arises.
Wondering how you can scrape up enough cash to pay yourself first, or save money?
Commit to saving a percentage of every dollar that comes your way before you do anything else. No exceptions!
I recommend starting with 10 percent and working your way up or giving yourself a raise as our financial situation improves. If you receive $100, $10 of it needs to be set aside. For those small amounts, try saving the entire amount to build your cushion faster.
Although my finances are in much better shape than they once were, I still set aside at least 10 percent of every check and direct deposit that hits my account. This prevents me from going into panic mode if a client does not remit payment in a timely or an unexpected expense arises.
5. Watch the Company You Keep
When you’re in the midst of any type of storm, whether personal, career-related or financial, it’s hard enough to get through the day with a smile. The last thing you need is a negative group of “friends” who belittle you and make you feel worse than you already do.
A better alternative: connect with those who can provide encouraging words and serve as accountability partners.
Finally, don’t give up because there is a light at the end of the tunnel. If I managed to make it through and save $1,000, so can you!