How to Survive Financial Hardship

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Survive Financial Hardship
Survive Financial Hardship (Image: http://www.passportdebt.com/signup.asp)

Surviving is the concept of hanging in there and living through something. Financial hardship is an unfortunate reality for some people, and the idea of surviving financial hardship is even too hard to imagine, let alone accomplish--but it can be done.

Acknowledge the challenge of the times. Denial will only lead to further hardships, so acknowledge that times are hard, finances are limited or gone and recognize the situation for what it is. It is impossible to ask for help if you do not acknowledge what you need help with.

Anticipate the areas most impacted by this hardship. We are unique, our circumstances are unique and our responses to hardship will be unique. However, financial hardship will affect each person physically, psychologically and spiritually. Depending on your area of strength, one of these areas may impact you more than others, but anticipate or observe your response to financial hardship in each area, so that you can seek targeted help.Physically, financial hardship means doing without. Maybe you finally start thinking about what you eat and make fewer but healthier choices. Maybe financial hardship causes a loss of your home. Maybe you move into something more affordable even if it isn't your style.Psychologically, financial hardship sometimes creates a cloud of failure, panic or anger. Some may find a stream of conscious creativity as we see new ways of dealing with an old problem. Spiritually, we may get stronger as we cling to our faith, or get weaker as we feel helplessly broken. Knowing where weakness is likely to manifest at its worst directs the area of help most needed. A hand-out may not always help as much as a sincere word of encouragement or a kind smile.

Create a list of your debt, expenses and income. The debt column will probably be greater than the income side, but write it all down.

http://www.cathy-hunter.com/images/Calculator.jpg
http://www.cathy-hunter.com/images/Calculator.jpg

Go through the list of debts and expenses and identify all the debt repayment and separate those. Paying consumer credit and debt repayment cannot be at the top of the priority list if you can hardly buy groceries. Things like keeping the utilities on buying fuel to get to work must get priority on this list, moving debt and credit card repayment to the lower priority.Assuming you have savings or a 401K you must now tap, be frugal. If not, knowing the minimum you need to meet the most basic necessities is a good place to start. Can you get a second job? Can your teen cover more of their own expenses? Is there a lunch invitation you can accept? Is there an item that might fetch a fair price on ebay? What can you sell at a yard sale? Carpool? Get a bus pass?

Expect the onslaught of harassing calls from bill collectors and plan ahead. The moment you stop paying or pay your debt late, the collectors will call. If the problem of not being able to pay in the first place was overwhelming, these calls only add to that frustration, so plan a strategy for handling these collectors. There are several options such as negotiating directly with the creditor, debt consolidation, debt management or maybe even bankruptcy. Each one of these strategies have different requirements of you. Your level of default and your ability to repay at a lower or slower level may determine which option will actually work for you.

Use your caller ID and limit the number of creditor calls you do answer. Ignoring them all together may seem like the easier way to go, but you do need to communicate with them to at least determine what their hardship program offers. If you are using a debt liason or lawyer, then they usually advise you to let them handle the negotiations with creditors on your behalf. If you choose bankruptcy, then at some point the creditor calls will have to legally stop.

Be hopeful and proactive. Regardless of how you spent this day, the sun still hangs in the sky. 24 hours later, a new day is here and so are you. Believe it or not, when you go to bed at night, that day is over and in the morning, a brand new slate is there for you to control. Surviving anything first requires a decision to survive. Being proactive is a very strong place to start on the road to surviving anything. Speaking with debt counselors or an attorney is proactive. Having a family conference and enlisting everyone's help to keep the utility bills down and to stop asking for new toys and clothes is proactive. Looking for a better, or an additional job is proactive. Taking small but determined steps that ultimately help, clarify or fix the problem leads to increasing hope, and hope is the most important ingredient for surviving.

http://www.flickr.com/photos/23437487@N00/1804325890/
http://www.flickr.com/photos/23437487@N00/1804325890/

Unburden you heart and mind by sharing the pain with someone who cares or will listen. Having a good friend, a therapist, or just having a good listener in your life is a strong resource at this time. Keeping it all in and hiding the problem and pain at the very least prohibits you from getting any help--or worse, increases the internal pressure on your spirit and your personality. This person may not be able to offer any direction or financial help and when you ask them to hear your pain, let them know up front you are not expecting them to be able to solve your problem, but you are asking them to hear you out. Sometimes, as you share the problem the answers begin to reveal themselves. Sharing the problem with a good listener sometimes feels as if you lightened the load you carry.

Check out local resources for help. Churches, the government and other charitable organizations very often have resources available, that unless you are the one in need--you may never have known those resources existed. This may require you taking an anti-pride pill. Apply for food stamps and medicaid if necessary. You must eat to live and you must feed your family, so if you used to make thousands per month and you are suddenly unemployed with no income, swallow your pride and ask for help. If you can call family and friends first, then do so--but sometimes they can't help, or can't offer enough help--so avoiding charity may not be an option for you.

http://www.flickr.com/photos/adrian/2171382655/
http://www.flickr.com/photos/adrian/2171382655/

Know your rights. Collectors, your employer and others may not care that you are having a financial hardship. Threats from these areas are very scary and the tactics they try are often illegal. Losing your job is not a good idea at this time so meet with your boss to find out what the problem is. It might be your financial hardship is making you distracted at work or affecting your productivity. Whether or not your tell your boss about your hardship is up to you, and is not always a good idea. If your job is in jeopordy, schedule an appointment with your supervisor, hear their problems and plan to proactively limit or fix that problem. In the mean time, review your contract to ensure your rights are not being violated because some people will take advantage of your desperation.

Tips & Warnings

  • Avoid the temptation to add debt at this time. Home equity loans, additional credit cards and a loan from your best friend may seem to be the ticket out, and they very well could be--but be careful. Not being able to repay these only add to the already overwhelming burden and loss of things even more valuable--your home, your friendships your peace of mind.
  • When you do survive and the hardship is a painful memory, avoid a repeat experience by learning wise money management and investment strategies.
  • Avoid debt, eliminate existing debt and save money.
  • Have a safe place to escape to, whether imaginary or real. Visualizing is a strategy that can work regardless of your location. A cold room can become a warm beach with a focused imagination. However, when possible, go to the beach and find a quiet spot to meditate and quiet the storm in your mind.
  • Don't numb the pain with drugs or alcohol.
  • Pain--though painful, causes an amazing, guaranteed human response--an urgent search for a solution. If we get burned, we seek to cool it. If we get cut we seek to bandage it. Drugs and alcohol are a route of escape for some going through financial hardship because the numbing effect leads to momentary forgetfulness. Forgetting does not allow the pain to go away so inevitably, the pain and the cause of the pain lingers long beyond what it might have, becoming even more complicated.

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