5 Steps to Recover from Financial Problems

It is fairly common to find ourselves in a financial crisis due to either sickness, poor decisions or happenings beyond our control. The question is, how do you rise from the disaster and get back on your financial feet? Here are five steps to help you back on track.

Assess your situation, take inventory of your losses

When you went down financially, you lost a lot, and probably in some bad debts. The best thing to do is to assess what you have left first, regarding assets or any money. Secondly, your liabilities at the present moment should be able to advise on where you stand in the debt-ledger. How much money do you owe? And thirdly, you have to know where you currently stand, regarding what you can currently raise. How much income would you be able to bring in by the end of the month? Are you able to bring in any income at all? What is your current credit score and how much do you spend daily, weekly and monthly?

In short, before you reach your ultimate financial goal, which in this case is entirely recovering from the crisis, you must first locate where you are, what has already gone down the drain, what is remaining and what debts you need to offset urgently. Your recovery plan must have any other long-term implications that you may have such as alimony or health issues.

Set out your goals

After you have taken stock of what is lost and what is left, you will now move on to defining your goals. Define what would be your minimum achievable goals and your ultimate goals. This is akin to setting up your results or destination.

Your goals must be specific to what you want to achieve at the end of it all. They shouldn’t be generalized. If the goal is making more money from a given income source, set a target of how much money that has to be. Is it $10,000 or $50?

Secondly, you have to find a way of measuring your goals. Put in some timelines of when you intend to get how much. Thirdly, the goals you set must be attainable. Do not set your goals too low or too high. Set them within a limit that you can achieve while at the same time considerably stretching you out of your comfort zone. This implies that they should as well be realistically drawn.

Accept your situation

A big step for recovering from a financial crisis is to accept that you are insolvent or bankrupt. Living in denial and struggling to cling to your former lifestyle is a bad idea. The best way is to stop wallowing in your misery and accept the reality. Whether it was your wrongdoing or someone else’s, the most important thing is to stop living in the past. Lawyer J. Craig Murphy of Kimmey & Murphy, P.C. recommends “Get out of the defense mode and get on the road to recovery with a strategy.”

Come up with a plan

With your goals set that define what you intend to do, the next important thing is to have a solid idea in place that will enable you to move from your current location to the next. This plan will allow you to identify what you need to offset in debts now and what can wait. Understand what is coming in and what is going out. You also will be able to know how you will be able to get going while you are at it so that you do not just concentrate on paying debts, but also reaching your primary goals. And your primary goal, in this case, is getting out of the financial crunch you are in now.

Start now

Even with nicely set goals, a well-drawn plan, without action will amount to nothing. So you must start now if you have to be out of your situation. The action has to be consistent and geared towards sticking to what goals you set out. Do not veer off a well set out strategy just because you got frustrated in actualizing it or that you received instant results and didn’t see any need of going the whole way.

Remember also, if you fail in anything, you can refer back to your plan and steady yourself back on course.

Adam Richards

About Adam Richards

Adam Richards is a semi-retired business professional originally from Bangor, Maine. He spent the majority of his career in sales and marketing where he rose to the marketing lead of a Fortune 1000 company. He then moved on to helping people as a career counselor that specifically helped bring families to self-sufficiency through finding them rewarding careers. He has now returned to Bangor for his retirement and spends his free time writing. This blog will be about everything he learned throughout his career. He'll write on career, workplace, education and technology issues as well as on trends, changes, and advice for the Maine job market and its employers.