Are you dealing with a personal financial crisis …one that seems there’s no way out of?
We’ve all been there. Sometimes it’s not our fault…and sometimes it is.
Being stuck in a personal financial crisis sucks. Money stress affects your life, your family and can make you feel like a failure.
I know, because I lived through years of money stress. My family lived paycheck to paycheck and I can’t tell you how much sleep I lost over worrying how we’d make ends meet.
Would I ever be able to pull us out of this situation?
It was during this time that I read a book that changed everything, it was the catalyst for turning my family’s financial life around.
There is a way out of your personal financial crisis.
It’s going to take work and discipline but you can pull yourself out of a financial hole and get back on track.
Today, I’ve built a multi-million dollar portfolio and have created the kind of financial security for my family I never thought possible. If I can turn things around, I’m telling you, you can too.
Whether you’ve lost your job unexpectedly, dealing with a financially devastating divorce, up to your neck in debt or a bunch of bad money decisions have caught up with you, there’s still hope.
Digging yourself out of a personal financial crisis
Work to lower your cost of living – as of right now
Slashing your cost of living is the number one thing you can do immediately to improve your financial situation – your outgoing expenses are something you have at least some control over.
You might only have to tighten your spending habits for 6 months or so, or it may be a long term commitment. Either way, embracing a more frugal lifestyle doesn’t need to be as grim as you might think!
Turning my family’s financial situation around meant making a few short term sacrifices. We tightened our belt when it came to meals out and discretionary spending. This is the type of spending that doesn’t seem like much at the time, but when you do it multiple times a week, it adds up. We also worked diligently to get our credit card debt down, to eliminate the unnecessary interest cost each month.
It was slow at first, but over time, the savings started to add up and make a difference.
Create a plan for your money
A lot of people in tough financial times don’t track and plan their money, because hey, there’s not a lot to manage!
This is definitely the wrong approach. You need a plan for how to spend your income every month, even if that income is meager.
Coming up with a plan puts you in control, and when it comes to digging yourself out of a financial hole, control is everything.
I don’t believe in budgets, I believe in spending plans. A budget can feel restrictive but a spending plan is the best tool you have to gain control of your finances and ease the worry about your current situation. Get started with your spending plan here.
Focus on bringing in extra income
Whether it’s driving Uber on the weekend for the short term to boost available funds or creating a more permanent additional income stream, like starting a business, bringing in extra income is going to help.
Many profitable businesses are the result of unexpected job loss or a financially tough time; when your back is against the wall, you might surprise yourself by what you’re capable of.
No idea where to start? Check out a bunch of ways you can make extra money here and here.
Take the opportunity to change your financial destiny
If you’re facing a personal financial crisis because bad decisions and poor planning suddenly caught up with you, hitting rock bottom can actually become the catalyst for getting started on the path to financial freedom.
It depends how you handle it. If you do what you can to scrape through but don’t actually change your financial habits, you could end up in exactly the same situation.
Or, you can use rock bottom to say enough is enough, I’m going to do everything I can to change my financial destiny!
Read books, take courses, listen to podcasts, basically learn as much as possible about money management. You can’t change the past but self-education is the key to a completely different financial future.
Imagine yourself in 12 months from now if you decide to take massive action to improve EVERY aspect of your financial life. How different things could be a year from now!
If I was to pinpoint the most influential ‘thing’ on my wealth journey it would have to be Harv Eker’s book Secrets of The Millionaire Mind. I recommend you get your hands on a copy ASAP.
Consider downsizing the house and car
“The best home to live in is one where you actually have a real use for every room in the house”
Downsizing your home is something to consider if you’re dealing with financial challenges that will take drastic action to overcome or the ‘not enough money’ to retire scenario.
Shorter term issues, such as a job loss, may not call for a home downsize. Instead, you could consider temporality renting out any unused space in your home.
Downsizing your car, on the other hand, is easier and something you can do in all scenarios. Focus on getting the most bang for your buck – what will get you where you need to go for the least amount of money spent.
Ok, so you might be thinking –
“Andrew, how can I even think about investing when it feels like I’m barely scraping by!”
Here’s the thing, if you’re focused, you won’t be in this financial wasteland forever.
As you get back on your financial feet you can channel more and more into your portfolio.
I started investing as soon as I could. As soon as there was any spare cash flow, I directed it to investing. I just knew it was the way out in the long term.
Accept your financial crisis reality and don’t procrastinate
Distracting yourself temporarily from your financial problems isn’t going to make them go away. Just the opposite; it can make the problem worse.
Face what you’re dealing with head on and commit to moving forward; living in the past only makes forward progress more difficult.
Let go of the ‘woulda, shoulda, coulda’ and take action NOW.
Your situation won’t change overnight but if you consistently take meaningful action, it’s inevitable that things turn around.
It’s the ability to persist that separates those who truly change their financial realities from those who just dream about it.
On behalf of everyone at The Investor’s Way, I wish you and your family a very merry christmas, and look forward to serving you as best we can in 2020.