What Do You Do If You Hit Rock Bottom Financially?

What Do You Do If You Hit Rock Bottom Financially

Hitting rock bottom financially is one of the scariest and panic-inducing experiences that a person can ever have. Maybe you lost your job and no matter what you do, no money is coming in. You are already far behind with your debts and you barely make ends meet. You got all kind of notices on the table, from disconnection notice to eviction notice.

Can you still do something about the situation? Of course, you can! If there is one thing positive about hitting rock bottom is that there is no other way left but to go up. Things might look bleak for now but there are things you can do to find a silver lining.

Start Climbing Back Up ASAP

When people hit rock bottom with their finances, many of them just sit and stay there, trying to make excuses and wallowing on guilt and self-pity. They are left wondering why only bad things are happening in their lives.

Remember that you are responsible for all mistakes you made. Yes, there are people who were given a bad hand in life but it is still up to you how you will react to the situation.

Tell yourself that you will never be someone who just sits at the bottom and wait for the rescue team to come. Find a way to climb back up and start the climb right away.

Discuss Your Situation with Your Creditors

Many people usually hide from their creditors when it becomes difficult for them to manage their debts. What they fail to realize is that this only makes situation harder because avoiding your creditors will not only make you earn an enemy. This can also increase your stress levels and worse, you might need to face a serious legal trouble.

Add up all of your existing debts, determine the minimum that you can pay back on every amount and meet with all your creditors such as the bank so you can renegotiate the debt’s terms. Creditors are often open to this as this is much better instead of losing your money.

Learn to Save

There is a possibility that the money you have left is very little after you hit rock bottom. The secret here is to learn to spend less than your earnings, save like you never did before, and live in the most frugal way possible. Stick with a cash-only system and record every single dollar that you spend on your smartphone or a good old notepad. This can help you in better analyzing your personal spending habits.

This is the time to put a stop on your indulgences as this will let you appropriate the money you earn. Instead of eating out, eat more at home. Prepare your own coffee instead of grabbing a cup at your favorite café. Buy only your needs instead of your wants.

ways to automate your savings

Think outside the box to find affordable housing. Rent a garage apartment, basement, or a room in exchange for home maintenance or yard work. You can also look for a roommate or renter for the place where you live right now. Search for cheap options for transportation. Attend free events in your place, use the library, exercise outside, and be around positive and encouraging friends.

These measures might seem a bit drastic but think of them as just temporary means to a better end. After your finances become more stable, you can enjoy the freedom of living within your means.

Take on a Second Job

Another great solution you can try once you hit rock bottom was to get a second job. If you are working as a regular 9 to 5 office employee, you can try looking for online jobs that you can do during your spare time. Freelancing is now a popular form of work that can pay you a good amount of money. Instead of looking at your downfall as a failure, use it as a motivation to start making significant changes in your life.

Build an Emergency Fund

More often than not, the first thing you do once you realize that you have very little money left to save is to avoid paying your debts. The main problem with this particular approach is that when an emergency happens, you will end up with more debt just to pay for it. No matter how small, creating a nest egg can serve as your safeguard from incurring more debt.

Start building your emergency savings account. Be determined to save $1,000 as fast as possible. You can increase it later to living expenses good for 3 to 6 months. Remember that this money will only be meant for true emergencies and not for vacations or gifts. This savings fund will serve as your protection from debt when unexpected circumstances occur.

Seek Support

There are times when support is critical for various financial problems. It could be your spouse, your parents, or someone willing to lend a helping hand. Seek their help and work with them to manage your finances better and reduce your expenses.

Hope for the Best

Hitting rock bottom financially might make you lose hope to the point that you no longer want to continue your journey. However, don’t forget that sometimes, sufferings are what can lead you to learn how to persevere. When you persevere, you can develop a better character. Once you have a strong character, you can continue living with hope despite all the challenges that come your way.

Learn how to control yourself. Continue to take steps forward, no matter how small. Little by little, your hope will return.

So, if the time comes that you hit rock bottom financially, always remember that you are not alone and you will never be. Even some of the wealthiest people of the world also lost everything at one point but they still bounced back on their feet. With determination, support, and discipline, your financial situation will surely improve better than what you expected or hoped for.