Nobody prays ever to experience financial hardship, but as part of life balance, it happens.
People always say financial hardships are a result of monetary irresponsibility, which isn’t often the situation.
Most people find it difficult to pay their bills for reasons other than this.
What are the Causes of financial hardship?
Listed below, are some life experiences that can impact someone financially:
- Personal or family health problems or injury
- Long term decrease or loss of income
- Exiting an inadequate or escaping domestic violence
- Death of a spouse or significant other
It could happen that a person going through financial struggles now could be starting their financial wellness journey before getting hit by a problematic situation that thwarted their plans.
However, experiencing financial hardship is exceptionally stressful. It can even disrupt your mental health and boost aging as a result.
This article is here to point you in the right direction in dealing with difficult situations, so you beat it as soon as possible.
Warning hints of financial problems
One way to get ahead of your financial struggle is to identify the root cause on time. Some indications that you’re facing financial hardship may include:
- Depending on credit to pay your daily essentials
- High or maxed out credit card balances
- Settling for high-interest debt like payday loans or cash advances
- No crisis savings or sinking funds
- Continually paying late and/or overdraft payments
- Bad credit scores as a result of late payments and a high debt to income ratio
- Not being able to fulfill your minimum payment obligations.
Take these points into consideration is one of the primary steps to creating a financial plan to improve your situation.
How to overcome financial hardship
1. Modify your budget to suit changes in your income
If you’re facing financial difficulty, it’s imperative to adjust your budget to suit any change in your income.
For instance, if you’ve lost your job or encountered a notable reduction in your income, you might need to start budgeting for an unsteady income.
No income coming in? Leveraging on debt to get through each day? In this situation, it’s even more critical to budget your spending so you can minimize the money you owe.
Next, create a debt repayment plan that you’ll keep nearby until your income problem resolves. You’ll need to alter your budget to create room for any significant bill that’ll come up.
While you may not be able to clear your debts outrightly, understanding your current spending habit is essential.
Your focus should be on your core necessities like food, medicines, safe housing, core utilities, and transportation.
By adjusting your budget, you’ll notice you’re spending in your significant categories.
This realization can help you channel the money towards more pressing bills.
2. Communicate with your service providers
The last thing you’d want is to lose access to water, electricity, internet service (since working from home is a new trend), or any other major utility.
To avoid this, you’d want to ensure you reach out to your service provider as fast you can to inform them that you’re experiencing financial difficulties.
Several providers will be willing to work with you, and you can negotiate a deal in advance of any cut off actions going into effect.
You’ll also prevent your accounts from accruing excessive late fees or going into collections by communicating your predicament.
3. Determine what financial hardship programs your lenders are offering
If you have debts to pay, your lender can set up a financial hardship program that’ll assist you, so you’ll focus on getting your finances back on track.
From car loans to credit cards to mortgages to student loans, lenders typically have different hardship programs.
These programs may include interest waivers, reduced payments, or payment deferrals.
However, ensure you understand the details of any plan you commit yourself to. Specifically:
- Any fees that’ll be charged as part of the hardship program agreement
- The details of how payments are made during the program
- Whether or not a bulk sum is demanded during or at the end of the program
You’ll also need to provide proof of hardship in the form of a hardship letter.
This letter is basically a detailed explanation of your hardship and the influence it’s having on your finances.
4. Negotiate bills in collection
A lot of people with bills in collection are bothered by having to encounter them. Some of them think that debt in collections isn’t something they can fix.
When it comes to dealing with your bills in collections, don’t be scared. The worst-case scenario is you that you get a “no” when you try to negotiate.
Additionally, not dealing with bills in collections can have a negative long term repercussion on your credit.
Bargaining bills after collection actions have been taken still works. You might be able to remove negative remarks from your credit if you come to a payment agreement. And in some cases, you might get part of the balance dismissed.
Just ensure you ask questions until you understand the specifics of any agreement, including any reporting that’ll be made to the credit bureaus.
5. Find a side gig for extra income
Making extra cash from a side gig or part-time job can go a long way during financial hardship if you have hours to spare.
A side gig or part-time job must not be permanent, but getting one can really help you get ahead.
Note that it’s ok to work odd jobs to get extra cash. You could become a freelancer, get a “work from home” gig or work part-time in retail, customer service, or delivery service.
Once you start doing this, make sure the money you earn goes into your financial obligations and meeting up your bills. The last thing you’d want is to work extra hours and have the money wasted.
6. Don’t give up
As mentioned earlier, financial hardship can be caused by various reasons. The good thing is that you can always survive and thrive. So don’t be dismayed and don’t give up.
You might go through a surge of emotions regarding your finances, but you can always get through it.
Set aside self-judgment, don’t allow other people to judge you or fill you with negativity, learn from your mistakes, and move forward.
It’s also important you make out time and work on your self-development in addition to improve your finances.
I set up this blog to help, and it will serve its purpose. Remember, the daybreak always comes; after the darkest night.
You can win this.