In my seven years as a financial counselor I have met with thousands of clients to discuss where they are on their financial journey and where they would like to be. Many times, the timing of their visit coincides with a financial shock, such as a job loss, a change in household size, or medical issue.
During stressful times it is a good idea to talk things through with a non-biased third party that can help you look at the situation and your options objectively. If you’re interested in setting up a financial review, call The Village Financial Resource Center at 1-800-450-4019.
Here are my top 6 tips for navigating a period of financial uncertainty:
- Stay calm. In times of stress it can be hard to do, but taking a step back before making any major decisions is key. It is more difficult to think logically when emotions are running high. I have seen clients make major decisions at this step in the process, such as selling their home or vehicle or taking on additional debt, to try to make things work. While some of those options may be necessary, it is good to look at all the pros and cons before making a final decision because there may be another way to reach the same goal.
- Take inventory of the situation. Make a list of everything you have and all the debts you owe. This allows you to see what debts must be addressed and the resources you have available to work with. This will help prioritize expenses.
- First things first. No matter your financial situation, the first step is to cover your essential living expenses: housing, groceries, medical care, and utilities. Next would be secured debt payments like your vehicle and student loans, as they don’t go away in a bankruptcy. Last on the list would be unsecured debts like credit cards, medical bills, and collections accounts.
- Tighten up the budget. Whenever your income or expenses suddenly change you should immediately re-evaluate your budget. Start with your essential living expenses, move on to your secured debt payments, and lastly credit card payments. Look for categories that are non-essential like eating out or entertainment that can be discontinued until the situation improves. Reach out to service providers like insurance and cell phone companies to see if there are ways to reduce those expenses without cutting them out altogether.
- Reach out to your creditors to ask for help. Contact your creditors directly and explain your situation to see how they can help. Many creditors have internal hardship programs where they are willing to reduce or postpone payments for a set amount of time. This is especially true of federal student loans where it is possible to receive up to 36 months of forbearance if approved.
- Consult with a professional. It is often helpful to get outside advice when dealing with a difficult situation. The financial counselors at The Village are ready to help no matter where you are in the process. You may also consider reaching out to our mental health providers as well if the stress is becoming hard to manage.
About the author
Alicia Kellebrew is a financial counselor with The Village Financial Resource Center. She has a Bachelor of Business Administration in Banking and Financial Economics.