Financial Crisis Survival

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We want you to share in our Joy! We live in an interconnected world and a global economy. A financial crisis that happens on the other side of the planet or the other side of the city can affect our financial survival. And we are well aware of countries and companies that are in trouble financially right now.

8 ways you can prepare and plan

You might also want to put a bunch of that cash in a safe in your home rather than a bank. You know — just in case there's no electricity and the ATMs don't work, or the bank fails, or the FDIC runs out of money to pay everyone should there be a run on the bank. If you are a small business person and your business is in trouble, do you think for one minute that the government is going to bail YOU out? Only if you want to kill it completely! Self-reliant people do not need the government to provide all the services that it tries to give us.

Governments that provide too much take away our power and, unfortunately, too many people are allowing it. Co-authored by Michael R. Be aware that negative emotions are normal. Before addressing the financial elements of a personal financial crisis, it is important to address the emotional elements. You have to recognize that emotional turmoil is a normal component of the process.

Depending on the cause of your situation, you may experience stress, depression, or anxiety.

8 Ways to Survive a Financial Crisis

This may be accompanied by a sense of guilt or failure. You may also feel as if you have no control over your situation. These emotions are a normal component of going through a financial crisis. While it may be difficult at first, these emotions will likely pass over time as you adjust to your new circumstances, and re-gain control of the situation by taking action.

Focus on accepting your financial situation. When faced with a difficult situation, people often try to deny or ignore the situation. While it may feel better to do this, it does not help in the long run. Accepting your situation can empower you to face your difficulties as they are and conquer them head-on.

Try to channel any negative energy about the situation into positive, solution-focused actions. For example, instead of dwelling or blaming yourself for a scenario, try taking that negative energy and using it to make a commitment to solve the situation once and for all.

Talk about your situation. Confide in close friends or family members to talk out your worries and work out possible solutions aloud. Your confidants may be able to offer advice from their own experiences or those of their friends. Not only does this provide emotional support, but it exposes you to different and potentially more productive ways of approaching and dealing with the situation. In extreme cases, you should consider seeking the help of a professional therapist.

You should certainly seek professional help if your financial crisis is causing you to struggle with depression, have anxiety attacks, or consider harming yourself or others. Be honest with your family. Let your loved ones know that you are going through a financial crisis. In many cases, it can be beneficial to let children know that the family is experiencing tough times.

Five Tips to Survive an Economic Crisis

This is because some extracurricular activities music lessons, summer camp might have to be sacrificed for the good of the family. Just be sure to reiterate the temporary nature of these sacrifices. You can also encourage older teenagers to get part-time jobs. If they are over age 18, consider having them pay rent. Commit to staying positive.

Before making a plan to remedy your situation, make a commitment to focus on the positive. Think about it this way: Thinking positively can improve your mood, reduce your stress, and help you approach the situation in a way that is conducive to solving it. Remember that regardless of your situation, others have faced and solved it before. Focus on being grateful for what you currently do have. For example, if you lost a job and have a large amount of debt, you could, perhaps, focus on support systems you have like friends or family. The first step to resolving a financial crisis is to get a clear picture of your entire financial situation.

Begin by looking at your assets, which can be simply defined as what you own. Assets are a source of financial strength. They typically include any value you have in your home, cash in checking or savings accounts, any value you have in a car, and any money in retirement or investment accounts. Assets can also include any other valuables that may be worth money like jewelry, collectibles.

Consider taking your valuable assets to an appraiser or researching them online so that you can know how much your assets are really worth. That way, if you decide to sell them, you'll know if you're getting a good deal. Create a column on a piece of paper that lists these assets and their values.

At the bottom, sum up the values to determine what the total value of your assets is. For more information, see how to make a list of personal assets. Liabilities refer to your debt, or more simply "what you owe".

They are the opposite of assets. Liabilities include credit card debt, lines of credit, mortgages, unpaid bills, student loans, and your car loan. Using the same piece of paper you used for your list of assets, create a column that lists all your liabilities, and their values. At the bottom of the column, include the sum of your total liabilities. Calculate your net worth. Your net worth is simply your total assets minus your liabilities. This is the figure that represents how much is left if you were to sell all your assets to pay off your debt, and is a good figure to describe your current financial situation.

Knowing your net worth helps you understand options. For example, it may be necessary to sell assets in order to satisfy creditors if you are in debt, or to use any accumulated savings for the same purpose. Typically, any assets that are not absolutely essentially could be sold to satisfy essential debts. For example, selling a car to pay off a credit card can improve your credit rating, reduce your debt payments every month, and get creditors off your back.

Even during a bankruptcy proceeding, creditors and courts may demand that you sell off certain unnecessary assets before your liabilities can be settled. Therefore, it's best to sell off these assets beforehand. Once you know your net worth, it is now necessary to look to your income and expenses. Knowing what these are can help you determine whether or not your net worth is shrinking or growing, and affects your path to recovery.

Income is fairly simple to calculate by simply adding together any and all sources of revenue. For most people, this will be their wages from work and any regular government payments like social security or other forms of assistance. Remember to include necessary automatic deductions so that your income figure represents how much cash you actually have available to use. Deductions include any taxes, insurance, or withheld amounts on your paycheck.

In order to alleviate your financial crisis you need to have a good idea about where and how you spend your money. The best way to determine how much money you are spending is to review your bank account statements from the last two months. Make a list of how much money you spend on utilities, food, housing, gas, clothing and entertainment.

Once you know where your money is going you can make adjustments geared towards decreasing the amount of money you spend so that you can get back on your feet. Determine your monthly net income. If you subtract your expenses from your income, the resulting number is your net income. This represents how much you have left over at the end of the month. If this number is negative, it is a sign that reducing your expenditures will need to be a critical component of your overall plan to restore your financial well-being. However, if your monthly net income is negative because you are receiving a very small amount of income each month, it's more necessary to increase your income than cut your expenses.

Assess the consequences of your situation. In order to motivate yourself to get out of this financial crisis, you'll have to remind yourself why you want to improve your situation. In other words, what will you be unable to do because of your current situation? Be realistic about your life goals and calculate the costs of achieving those goals. Think about how just sitting back and settling into your new financial situation will hurt you and those around you in the long run.

For example, if you have children and want to one day give them the opportunity to go to college, think about how you will be unable to do so unless you turn around your current situation. Create a plan suited to your needs. The exact nature of your recovery plan will have to remedy the problem that got you into the financial crisis in the first place. Put simply, you will have to reduce debt if you have it and earn more income to replace your lost assets and financial security.

This may mean getting a new job, getting another job, cutting your expenses, applying for government assistance, or seeking debt forgiveness.

2. Learn to live without credit

For example, if your financial crisis was caused by a divorce, you will have to find income to replace the joint income you had in marriage. The simplest way to dig yourself out of debt and live sustainably off of your income is to reduce expenses and increase your income. Other options, like bankruptcy, while necessary in some cases, can also ruin your credit and cause a large amount of hassle.

Determine your fixed and discretionary monthly expenses. Fixed expenses refer to expenses that do not vary between months. What will you do if you get downsized at work, or if your hours are reduced? Can you get another car lease when your current lease expires? What if the economy does collapse? You need a plan for the following:.

Every month I meet with dozens of people who have gone through a job loss, or a marriage break up, or even medical problems that have forced them to cut their living expenses to survive.

How secure are you financially?

Use the extra cash to pay down debt, or to build up some savings. Here are some easy strategies for cutting expenses:. You can set your own destiny, so make a plan to reduce debt, use as little credit as possible, and plan for the future. There are options, but you are the boss, so only you can make the call. If you are burdened with debt, make the call today. Helping Your Finances or Up-selling? Consumer Proposals What is a Consumer Proposal? Posted in Financial Smarts By J.

Here are my top five tips for surviving: Reduce your debt This is critical. Learn to live without credit This is a hard one. Simplify your life Living without credit means simplifying your life. Do I need to pay for cable channels that I never watch, or would basic cable do?

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