No one ever wishes to fall into financial hardship.
Though this is an inevitable occurrence in life, we most times like to repel the thought of such fate befalling us. But denying the thought is wishful thinking. The unpredictability of life makes it a good idea for us to always plan for the unexpected.
As such, though you may want to avoid financial hardship by every means possible, you can't completely rule out its occurrence. Planning makes it easier for you to adapt to a period of financial hardship and soften the effects of its blow on your life. This would help you get back on your feet faster, with fewer financial bruises.
However, if you have failed to plan, and find yourself in a financial hole, here are some tips you can use to get through this difficult period.
This is a no-brainer.
Financial hardship implies you have less money to play around with. As such, adjusting your budget would come 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.
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 would be accumulating on the debt, and you would still need your regular income to sustain yourself during this period, there is not much sense in taking debt to invest. So if you are skilled or business savvy, you can leverage on this, take a loan, and start a side hustle.
When experiencing financial hardship, try to put your financial service provider in the know early enough.
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.
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 to fear 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.
If you do not 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.
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.
If 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 comprehend the facts of any program before enrolling.
Things you should be looking out for in the program include:
You may be required to submit a financial hardship letter to explain your precarious financial situation.
We also experience difficulties in life in one way or another.
Financial hardship is perhaps one of the most prevalent of life's difficulties. However, this is not a reason to give up and resign to fate. Inaction or resignation to fate would only worsen the situation.
Rather than being on the defensive, it's time to get creative and seek ways to turn around your financial situation. The tips outlined above are some of the steps you can take to start your long walk back to financial sufficiency and freedom.
Editor's note: This article was originally published Jan 14, 2022 and has been updated to improve reader experience.
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