A personal financial crisis can be caused by various life events, in which your financial security is at risk. Perhaps you’ve experienced job loss or illness which has affected your income, or the COVID-19 pandemic has affected your financial stability. Or maybe the rising cost of living, higher interest rates, and inflation have caused your day-to-day expenses to increase – leaving you on a tighter budget.
If you are looking for financial guidance during these difficult times, consulting with a Licensed Insolvency Trustee (LIT) can help. From Bankruptcy to credit counselling, or simply having someone who knows about financial problems to talk to, LITs are experts in all areas of debt help and financial support. They can offer you advice and support to help you manage your debt, and also deal with your creditors on your behalf. With the right support, you can gain the financial peace of mind that you deserve.
These are unprecedented times we live in. If you are feeling the pinch, know you are not alone. This podcast talks about how to cope with financial stress.
Here, we cover how to manage and survive a personal economic crisis and the support available to you.
Signs you may be struggling financially
While some financial crises are unavoidable, there may be some warning signs that could be an indicator that you’re heading for trouble:
- You are struggling to keep up with your debt repayments
- You are using your credit card(s) as a necessity, rather than a convenience
- You continually go over your spending limit/budget
- You are needing to borrow money to make it to payday
- You are paying interest only, or only the minimum payment on your credit card
- You are receiving debt collection calls from creditors, have obtained a wage garnishment or been threatened to have your assets repossessed
- Your energy has been cut off by your electricity provider, or you’ve been put on an electric load limiter
If any of the above apply to you, talking through your situation with an LIT can bring some perspective to a difficult situation. They can help put together a plan of action to manage your debt, or put together a budget to relieve some of your financial anxiety.
What you can do to survive a financial crisis
Whatever may have caused you to be under financial pressure, the consequences of a financial crisis are often similar. You may feel emotional stress, confusion and a loss of financial confidence. But there is always a way out of debt and financial struggles. By taking the right action and receiving support, you can get back on your feet. Here are simple steps to follow to help your situation:
1. Talk to someone
The first step in accepting the situation you’re in is to talk about it. After all, financial struggles can affect anyone, and it shouldn’t be something you feel shame or embarrassment about.
Confide in close friends or family and talk about your money worries. They may suggest different ways you can improve your situation, and provide some emotional support. You can also talk confidently to a financial advisor or LIT who will review your situation and present you with options on how to deal with your debt and financial struggles.
If you’re finding your financial situation is having a detrimental effect on your mental health, you should also consider seeking help from a medical professional.
2. Determine your assets
When dealing with a financial crisis, it’s beneficial to have a clear picture of your financial situation. Start by looking at your assets, which is essentially what you own outright. Assets can include any value you have in your home, any savings you have, value you have in your car and money in your retirement fund.
Other assets include valuables that may be of significant value, like jewelry or collectible items. For these items, it may be worth getting them valued so you know how much they are really worth. That way, if you choose to sell them, you will know what price to ask for.
3. Assess your liabilities
Liabilities refer to any debt you have. Liabilities include credit card debt, loans, mortgages, student loans or any other monies that you owe.
It may be worth you writing a list of all the liabilities you have, next to a list of your assets so you can assess what you own compared to what you owe.
4. Look at your income and expenses
It’s important to look at what money you have coming in each month. Is your income consistent, or does it vary by month (if you are self-employed)? Calculating your total income is fairly straightforward. For most, this will be your wages and any regular government payments like child benefit. Just remember to include any automatic deductions, so your income figure represents how much you actually “take home” each month.
You will need to have a clear picture of how and where you spend your money month-to-month. A good place to start is to look at your bank account statements from the last couple of months. Where did you spend the most money? Are there areas where you can cut back on your spending? Once you know where your money is going each month, you can make adjustments to reduce the amount you’re spending, to help you get back on track.
5. Talk to a Licensed Insolvency Trustee
Talking to a professional can help you to navigate your personal financial crisis and put a plan of action into place. Consulting with an LIT can bring clarity when it all feels like it’s too much to manage on your own. A Licensed Insolvency Trustee can offer unbiased, supportive advice on how to navigate your financial situation and the best steps forward.
Looking to get your finances back on track?
If you’re struggling financially at the moment, or even wanting to reduce your chances of a personal financial crisis in the future, why not reach out to a Licensed Insolvency Trustee? You can discuss your financial situation with a licensed professional, who can give you options and help put a plan together to manage your finances and get you out of debt.
Here at Allan Marshall & Associates, our professional and supportive LITs have years of experience to help you settle your debts. With their guidance, you can work towards the fresh start that you deserve.
Contact us today to discuss your money problems and to reduce your stress. We can help.
