Starting Fresh: Four Ways to Recover Your Personal Finances
Saturday, April 19, 2014, 1:00 AM | Leave Comment
If you have experienced a financial setback, there are certain steps you can take in order to get things back on track. Whether your personal finances have plummeted due to job loss, medical expenses or illness, assessing the situation and creating a plan will give you the chance to prioritize your budget.
You can also track your future expenses in order to avoid potential setbacks.
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Modify Your Spending Habits
One of the easiest ways to recover from any financial upset is to alter how you spend money. Start by temporarily eliminating any unnecessary expenses such as cable TV, gym memberships and expensive smartphone plans. Refrain from eating out until you’re back on your feet financially, and switch to off-brand items at the supermarket. You may also want to consider ride sharing to and from work.
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Utilize Your Resources
Depending on your personal finance situation, you may have various sources of income for paying the bills. Tally the balances in your checking, savings and other accounts, including investments and pensions. Don’t be afraid to use any rainy-day funds because you can rebuild the balances once you’re back on track. If possible, use the available equity in your home as well.
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Negotiate With Your Creditors
Making the minimum payment on credit cards and loans can be difficult if your finances have crashed. You may be able to get away with submitting nominal payments for a short time, but you will likely need to negotiate with the creditor eventually. When you do, ask for a temporary reduction of your monthly fee. You may also want to inquire about balance transfers to zero-interest credit cards.
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File for Bankruptcy
In many cases, filing for bankruptcy can be the ideal way to start over. If you file, you will be discharged of your unsecured debts such as credit cards, car loans and medical bills. This typically occurs within three months of filing. Chapter 7 bankruptcy lawyers can guide you through the process and provide details on the various options available to you.
The key to recovering your personal finances is to be proactive. Immediately address any mistakes you’ve made, assess your current financial status and plan wisely for the future. Determine your income for each month, and decide how much money you need to survive.
You should put some cash away for an emergency fund as well. If you set small, realistic goals within your budget, you can enjoy a fresh start.
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