HOW TO DEAL WITH FINANCIAL SET BACKS

how to deal with financial setbacks

Simen Hegstad Krueger, a Norwegian cross country skier, trained his whole life to compete in the 2018 Winter Olympics.  On the very first lap of the race, he slipped and fell face down in the snow, his Olympic dreams completely crushed. But, in an amazing turn of events, he was able to untangle his skis and legs, get up, and pass 63 other skiers to ultimately win the gold. No matter what kind of financial setback you may face, you CAN recover, just like Simen, and go on to crush your financial goals.

Ever since we refinanced our student loans, where our minimum payment went up from $200 per month under REPAYE to $4000 per month, we have had our fair share of financial setbacks. Within one month of refinancing, we’ve had to replace our HVAC, fix some big plumbing issues, repair our car, and worst of all, Danny’s vision was completely distorted in one eye (not a great thing when you’re a dentist) and he had to undergo a procedure for that. All of us will face some kind of financial setback at some point, and if you look at setbacks simply as part of the process of paying off debt, you’ll be much more likely to succeed.

STAY CALM 

One of the most important things that Simen says he did was that he stayed calm. Instead of running around like a chicken with your head cut off when financial emergencies strike, do everything you can to stay calm. Keeping a calm head will help you think clearly so that you can assess the situation for what it is and move forward.

DEAL WITH ONE THING AT A TIME 

Another thing that is easy to do when you are dealing with a financial setback is to start trying to fix multiple problems at the same time. By choosing one issue to deal with at a time, you will be able to regain traction in that area. That traction will bleed into other areas. Once you get a grip on one aspect of your finances, you can move on and start working on other areas. This will also help you to stay calm.

PRIORITIZE EXPENSES

One of the first things you should focus on when dealing with a financial setback is making a list prioritizing your expenses. Some of your expenses are much less important than other expenses. Obviously, food and your rent or mortgage are going to be some of your most important expenses– they go to the top of the list. But things like your cable bill and monthly visit to the salon are much less important– they go to the bottom of the list. List every expense that you have and give it a priority ranking.

MAKE BUDGET CUTS  WHERE POSSIBLE

After you prioritize your expenses, make cuts in your budget anywhere you possibly can. Any of the lowest ranking expenses should be eliminated first (such as the cable bill and salon visit above). You might surprise yourself on how little you can live on.  When things get back to normal financially, you can always go back to the way things were and work more non-essential expenses back into your budget. Or who knows! Maybe you will enjoy living a little more simply and having extra money in your budget to put towards other financial goals. For now, simply focus on making budget cuts where you can and keep in mind that your current situation is not forever.

LOOK FOR WAYS TO INCREASE YOUR INCOME

In addition to cutting expenses, you should look for easy ways to increase your income. If you are in a big crisis, you might consider taking a second or third job. Perhaps your financial crisis was losing your job. Take a part time job in the mean time to help pay your bills while you spend the majority of your time hunting for the perfect replacement job.  You can also do small things, such as sell things online or start an online business (which has relatively inexpensive start up costs). Do  you have some skill you can put to use? Maybe you have a good eye for photography and could take photos for people on the weekends? Get creative. Think of any way that you can possibly increase your income. And remember that all this extra work is only temporary, while you are digging yourself out of crisis mode.

BE PATIENT 

Financial setbacks aren’t usually fixed overnight. These things take time. Simen said after the race that he knew he couldn’t pass all the other skiers immediately. He had to pace himself, but eventually overtook each skier one by one, until he crossed the finish line winning the gold. Financial setbacks are just like that for you. Be patient. Keep working at it one day at a time.

No matter what kind of financial setback you have experienced (or may experience in the future) you CAN recover. All you have to do is stay calm, get to work, and be patient.

Have you recovered from a financial setback? I’d love to hear from you– comment below! 

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how to deal with financial setbacks

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