No one ever wishes to fall into financial hardship.
Struggling with your finances is a pretty common problem for a lot of people, yet it’s so easy to just deny the thought that it could happen to us.
But that’s just wishful thinking. The unpredictability of life makes it a good idea for us to always plan for the unexpected.
And so, though you may want to avoid financial hardship by every means possible, you can’t completely rule out the possibility of it happening to you at some point.
Planning ahead for those pitfalls makes it:
- Less stressful in the present, since you have a plan
- Easier for you to adapt to a period of financial hardship, softening the effects of any big changes
It can also help you get back on your feet faster, with fewer financial bruises.
However, if you haven’t planned, and find yourself in a financial hole, we’ve got you covered!
Here are some tips you can use to get through this difficult period.
7 Things You Can Do if You’re Struggling With Your Finances
1. Adjust your budget.
This is a no-brainer.
Financial hardship implies you have less money to play around with. So, adjusting your budget will float to the top of your mind – because you have to make use of every cent.
- Adjust your budget to accommodate any major bills that have come up.
- Focus on necessities and cut down on all luxuries.
- Make sure every penny is spent on something that you need.
You can also go for cheaper alternatives to save costs.
While you may not be able to meet all your financial obligations, understanding your spending pattern is very important!
2. Take on more debt – intelligently.
Taking on more debt during financial hardship can put you in a bigger financial hole than expected.
However, if you utilize debt intelligently, it could be your saving grace. Debt is not totally bad as it depends on how you use it.
Using debt to generate extra cash flow is a very good idea. The extra income would be used to pay off debt and the accruing interest, and also relieve the burden on your regular income.
Use debt to start a business, not invest, because with a business you can generate income in the short term. On the other hand, investing is a long-term approach and you may not be able to reap the dividends till after many years.
Considering that interest will be accumulating on the debt, and you would still need your regular income to sustain yourself during this period, there isn’t much sense in taking debt to invest.
When you’re struggling with your finances, and you’re skilled or business savvy, you may be able to leverage this, take a loan, and start a side hustle.
3. Contact your financial service provider.
When experiencing financial hardship, try to put your financial service provider in the know as early as possible.
Many lenders are eager to collaborate with you, and you may reach an arrangement far before any shut-offs take place.
By discussing your position, you’ll also be able to avoid the stress of your accounts, accruing extra late penalties or going into collections.
4. Negotiate with collections.
Many people who have bills in collections are afraid to deal with them.
Some people, on the other hand, believe that they have no control over debt in collections.
To clear the air, there’s nothing and no one to fear when it comes to dealing with your past-due debts. When you try to bargain, the worst thing that can happen is that you get a “no.”
Furthermore, failing to deal with past-due invoices can have a long-term bad influence on your credit.
It’s still worth attempting to work out a payment plan for past-due invoices.
They may even delete the unfavorable statements from your credit record if you reach a payment agreement. In rare cases, they may even forgive or dismiss a portion of the sum.
8 Important Things to Do if Collections Agencies Are After You
5. Get a side hustle.
If you don’t consider yourself to be business-inclined, or don’t have the wherewithal to shoulder the risks of running a business, you can get a side hustle to bring in much-needed extra cash.
A side hustle doesn’t have to be permanent, but acquiring one on the side can help you get ahead.
Part-time jobs in retail, customer service, or delivery service, finding a work-from-home job, or freelancing are some of the side gigs you can take up. Alternatively, you can also work odd jobs to bring in extra income.
6. Avoid payday loans.
A payday loan may seem like a good idea if you’re in a tight financial situation, but you should try to avoid them as much as possible.
These loans have a high-interest rate and might lead to more debt. Alternatively, you can apply for a salary advance loan if your employer offers one.
7. Apply for financial hardship programs.
When you’re struggling with your finances, and you have debt commitments, your lender may be able to assist you while you try to get back on your feet through a financial hardship program.
Lenders often provide a range of hardship programs, ranging from vehicle loans to credit cards to school loans. You may be eligible for rent and mortgage help.
Interest exemptions, reduced payments, and payment deferrals are some of the benefits which are offered in these programs. You should, however, ensure that you completely understand the facts of any program before enrolling.
Things you should be looking out for in the program include:
- fees imposed as part of the hardship program agreement
- how payments will be paid over the course of the program
- whether a lump sum payment is expected at any point during the program or at the end
You may be required to submit a financial hardship letter to explain your precarious financial situation.
Struggling with Your Finances? Get Back in the Driver’s Seat
We all experience difficulties in life in one way or another.
When you’re struggling with your finances, it’s easy to feel negative, worried and alone. But financial hardship is one of the most common of life’s difficulties. However, this is not a reason to give up and resign yourself to fate.
Inaction or resignation won’t solve your money issues – it will only make your situation worse!
Rather than being on the defensive, it’s time to get creative and seek ways to turn your financial situation around. The tips outlined above are some of the steps you can take to start your long walk back to financial sufficiency and freedom.
Updated from Aug 7, 2024
