How Can I Recover From Unexpected Financial Problems?

How to Recover from Unexpected Financial Problems

Severe financial problems brought on by losing a job, a divorce or an unexpected home or car repairs can leave you wondering How to Recover from Unexpected Financial Problems. Fortunately, unexpected financial problems can often be overcome without filing bankruptcy or filing a consumer proposal.

Make a budget:

Make Realistic Budgeting Goals: Before you start making your budget, make sure you have realistic goals for your finances. Before you start structuring your budget you should set a goal for why you want to budget. For example, if you want to get out of debt or you would like to increase your monthly savings your budget will be different. Track All Expenses: Before you can make a complete budget, you should track your day to day expenses daily for a few weeks to get an understanding of your minor day to day expenses. With this information, you can understand how your spending habits will impact your budget.

Compare your budgeted expenses with your actual expenditures to identify areas where you can save.

• Perhaps you can cut out things such as eating lunch at restaurants or expensive coffees.
• Perhaps you can take the bus to work, instead of your car.

• Now may be a good time to quit smoking.
• Can you reduce your entertainment costs?
• What about your landline phone? It is cheaper to get an internet phone (VoIP phone).
• Perhaps, if you have a cell phone, you can simply cancel your landline phone.
• How about cable TV? Many people are cancelling their cable or cutting the cord as they use streaming more and more.
• What about child care expenses? Perhaps a relative can help out and you can reduce this expense.

If you have reduced your expenses as much as possible the next thing to look at are ways you can increase your income.

Ways to Increase your Income:

• You can get a different job;
• You can work overtime;
• Get a second job;
• If your spouse is not working perhaps he or she can get a job.

Once you have reduced your expenses and increased your income it is time to attack your debt.

One strategy is to put your credit cards on hold and buy things with cash. You should list your debt in order of the interest rates each debt bears. Identify the debt with the highest interest rate and start to pay down this debt as quickly as possible. Once this debt is paid off go on to the next debt with a high interest rate. It is difficult to get started and difficult for the first few months. You will find that as you stick to the budget and start to pay down your debts it gets easier and easier. As you pay down your debt you will have more money for paying down your existing debt. You will get a great feeling of accomplishment as you watch your control over your debt increase.