What is the first thing you do when you find yourself facing an emergency situation? A lot of people panic. It turns out that panic is a natural biological and emotional response. However, it is not necessarily a good response. Panic can lead to foolish decisions that only exacerbate an already serious situation.
We often associate panic with things like health scares and accidents. But some people panic when facing financial problems. They see those problems as insurmountable and, as such, panic over the possibility of not being able to deal with the consequences.
If you are dealing with financial problems, know this: none of them are insurmountable. There is a solution to every problem under the sun. Do not panic, and don’t just give up and walk away. Think your problems through. Ask others for advice. Whether alone or with the help of others, devise a reasonable and logical plan to overcome your problems once and for all.
Examine Your Budgeting Habits
Quite a few financial problems can be traced back to poor budgeting habits. As such, examine your own budgeting habits. Do you even have a budget? If so, do you stick to it? Changing this one aspect of your financial life may prove to be the single most important thing you can do to solve your financial problems.
Perhaps you are the type of person who never learned how to stick to a budget during hard times. You know what a budget is and how it works, but you are not sure it will carry you through times of crisis. It will. The numbers don’t lie. If you are truthful with your numbers and they show that your income can support your budget, trust them. Figure out why you are exceeding your budget and address that problem.
Negotiating Debt Settlement
Sticking to your budget may not be enough to make significant progress in a reasonable amount of time. In such a case, you might want to consider trying to negotiate debt settlements. Debt negotiation is both possible and quite normal.
You may have creditors on the verge of sending you to a collection or taking you to court. Neither is ideal inasmuch as said creditors realize they will not get everything you owe them. That being the case, they are sometimes willing to negotiate in order to avoid collection in court. Negotiation gives them the best chances of recovering their money.
Bankruptcy May Be an Option
The most severe financial problems may dictate that bankruptcy is your best option. If those you trust most are pointing you to bankruptcy, don’t panic. Bankruptcy is not the end of the world. Furthermore, you can overcome a bankruptcy in time.
Note that there are two kinds of bankruptcies for individuals. The first is Chapter 7. It is reserved for people who simply do not have the money to repay their debts. A Chapter 7 bankruptcy eliminates some kinds of debts completely. Those that remain can be paid off via a payment plan approved by the court.
A Chapter 13 bankruptcy is intended for people who do have the money to pay off their debts. It allows a person to reorganize his or her finances and develop a repayment plan without having to battle with creditors. Note that both types of bankruptcies remain on a person’s credit report for seven years.
This post has offered a few suggestions for addressing serious financial problems. If you are facing such problems, don’t panic. There are solutions. If you do not know which solutions are best suited to your circumstances, you can always ask a professional for help.