We’ve all been there. Something we didn’t plan for happened and it cost us. A lot.
Nothing stings more than a financial setback, especially ones that ‘came out of nowhere,’ which often seems to be the case.
Financial setbacks don’t just affect your wallet but they can be draining emotionally. Time and physical effort may also be needed to fix what went wrong.
What do you do? It’s time to start the path to recovery.
1) Analyze the Situation
At this point you’ve probably thought 100 times about how you will be prepared the next time ________ (fill in blank) happens. For me it was my garage door breaking on a Saturday night or my wife’s car stalling in the middle of the road. Did I forget to mention our sewer line issue?
It’s easy to overreact, though, and it’s important to take a step back and look at the situation from a logical standpoint. Was there something you could have been doing to avoid the situation from happening or that would have dampened the financial blow? Maybe you could have been saving more in your emergency fund (or establishing an emergency fund). Perhaps doing regular inspections of your house so you are aware of potential repairs?
Whatever you end up deciding, it’s always good to take a step back and analyze what just happened. For my wife and me the answer was to establish an emergency fund that could cover financial setbacks. It’s helped us sleep better at night and could help you too.
2) Review Your Finances
Financial setbacks will have a bigger impact on you if you aren’t on top of your finances. Almost every individual, couple, and family can do a better job with their finances. Quite frankly, it’s not fun spending a couple hours a month of your precious weekend time reviewing your income and expenses. It can be empowering, though, to have a full view and understanding of where your money is going and where you stand.
In January we shared 15 Ways to Improve your Finances in the New Year. These ideas are things you can take and run with. The end result will be a better understanding of your finances.
3) Take Action to Improve Your Finances
Once you’ve reviewed your finances it’s time to take some of those goals and put them in action. Skipped a step or can’t think of goals? Here are three practical steps you can take towards improving your finances:
- Save Money – Whether it’s through couponing or cutting expenses, there is always something that can be done to save money. If you have high-cost hobbies, trade them for low-cost hobbies.
- Make Money – Getting a higher-paying job is one way, but making money through a side hustle is even better. If you need money ASAP we’ve got some ideas for you.
- Tame Debt – If you have credit card debt or other debt that is dragging down your monthly cash flow, make a plan for tackling it. Debt can actually be a great motivator for making more money through a side hustle, which is exactly the approach I took with my wife and my student loans.
The main point I’m trying to stress here is do something. Financial setbacks are tough; trust me, I’ve been through a few. If you keep things in perspective and take action you will be in a better spot the next time you have an unexpected bill or other setback.
Have you experienced a financial setback? What did you do to recover or what are you currently doing to recover?
____________
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Stepping back and analyzing the situation objectively is really important. When we came home to a smoking furnace I was so scared and freaked out I couldn’t really think straight. My solution to the problem? Let’s sell this place and run away. Thankfully Eric was able to step outside of the emotion and think about the situation with a level head. The new furnace was expensive, but it wasn’t the “end of the world”
20 years ago, when we lived in our old house, we didn’t expect that our house got burned. We were very down at that time, financially and emotionally. Fortunately my mom has a good savings and we didn’t have any debt at that time.
Clarisse @ Make Money Your Way I’m so sorry to hear about your home, but I’m glad you had savings and were able to move on from it. It’s amazing the impact that financial setbacks can have on your emotions.
StudentDebtSurvivor It’s definitely hard to think straight in those situations. I’m sure most homeowners have thought “let’s sell this place and get out of here!” when they’ve faced major financial expenses.
No, it’s not fun taking the time to review finances each week…..and to tell you the truth, I hate it. Every second of it. I’m a PF blogger, and I’m admitting that I do not like sitting down and dealing with my own finances. But I do love the feeling when I’m done, and Vonnie and I are on the same page and ready to go forward with our “fun” weekend plans. :)
I ran into my garage door on a Saturday night. It was a silly mistake and It really freaked me out. I was alone that weekend but thankfully my brother in law came over and pushed it back into position. I’ll have to fix it at some point, once we save up the money. Ugh! Also, my water heater broke on a Sunday night! Why do these things happen at the worst times? Thankfully we had the cash reserves for that emergency and we continue save in our emergency fund for future surprises.
DebtChronicles I’m pretty much on the same page as you. There are 1,000 things I would rather do with my time. Problem is, none of those things are nearly as important as being on top of my finances. The feeling of being done and being able to move to fun weekend plans is awesome.
Raquel@Practical Cents I think the big problem is that there is never a “good” time for water heaters to break and garage doors to have issues. Being a homeowner quickly teaches you the importance of an emergency fund and having money set aside.