Tips to Overcome a Financial Mess

Tips to get out of your financial mess

For those who’s financial situation is quite messy don’t lose hope you can get yourself out of this sticky situation. It will take time, it will take discipline and you will need to make changes to your life. You will also want to increase your household income.

The more desperate you are the more likely you will be to reach for a quick fix or the promise of one. Don’t fall for the trap of paying money to scammers who say they can make you rich overnight. Also be vary wary of people spruiking financial consolidation or financial counsellors who require a significant fee to provide their services to you.

Save your money and time, focus this on setting up a plan to get you to a stronger financial position, believe in yourself and take action.

As we focus throughout most of the content on our site, increasing your income will help you achieve your financial goals quicker and get you out of any financial mess you may be in and any plans should be focused on increasing your income as soon as possible. Yes knowing your current financial situation and creating a budget is important however cutting out your latte’s or daily treat isn’t going to do much to your financial situation. 

However if you increase your household income yet don’t fix the underlying issues that got you into this mess in the first place then you will be creating a bigger mess. Below are some tips on how to get out of a financial mess.

1. Earn more income

Simple and obvious however its amazing that people don’t start with this approach. Yes you will need to sort out the underlying issues which we go through below however the quicker you earn more income, the easier it is to pay off debt, save money and improve your levels of happiness/reduce stress levels.

Can you get a pay rise at work or apply for a new job earning more money? Can you take up a second job? Can you rent out stuff you don’t use that much. Can you earn money from a skill or talent that you have, better yet can you build an online business around this?

We discuss earning more income in detail across this site. For help in increasing your income, look at this article for ideas for earning money from home, ideas to build an online business or this article for freelancing work to increase your income.

2. Take responsibility for your current situation

There is a reason that you aren’t in the financial position you desire to be in and that is you! If you have tens of thousands in personal loans and credit card debt, that’s on you (except for those unlucky enough to be the victim of a financial crime).

No one else forced your to buy that new handbag or that big screen tv. You weren’t forced to upgrade to a new car when your current car worked just fine. Nobody forced you to upgrade to a bigger more expensive house to keep up with friends. Nobody forced you to blow your rent money on the horses at Belmont Park. You and you alone did this and you need to take responsibility for this. 

It’s time to stop making excuses, stop blaming everyone else for your troubles and take responsibility for your actions. Don’t blame your parents, your boss or your friends, it’s on you to realise this and it’s on you to improve your situation.

Don’t look for a guardian angel or prince charming to rescue you from this situation! Pull the band aid off and find out exactly where you stand financially and create a plan to get out of this. Find ways to increase your income and pay down debts. 

For some of you there may be extenuating circumstances that put you into your current financial hole (such as identity theft or toxic relationship), do what you can to put this behind you, reach to authorities or local agencies for any help they can give as well as friends and family. Your journey will be a little different to most people this article is target towards however you can also get back on top financially. 

3. Lay all your cards on the table with a thorough financial audit

For a lot of people in a financial mess they put their head in the sand and are usually ignorant to the true extent of how bad their financial situation. Ask most of these people how much they owe and aside from growing red with embarrassment they more than likely don’t know the amount, yet will continue to live their current financial life until the music stops.

As this is no longer you, it’s time to undertake a personal financial audit and find out exactly how much you owe (include monthly repayments and interest rate), exactly how much you spend and exactly how much your earn.

Once you’ve got this information you can start to put a plan together. You can create a budget (more tighter for the worse financial situation), set up your automated financial hub and start to move forward financially.

Be honest with yourself when undertaking this audit as there is no point in this if you continue ignorance. Make a vow or promise that it stops here, from now on all focus is on repairing your finances. No spending sprees or gambling blowouts, new finances new you!

4. Don’t get seduced by charlatans and hucksters who will help you for a “fee”

We touched on this earlier. You might be sucked into ads that promise get rich schemes or even worse, sharks that prey on the vulnerable and financially naive in selling consolidation service which in nearly all cases are high price bullshit services that do nothing but set you back even more financially.

Start believing in yourself that you can and will get through this and that you are smart enough to learn ways to improve your situation either through financial savvy, ways to increase income or both. Any spare money should be going towards clearing personal debt or increasing savings not to charlatans or crooks.

5. Set financial goals

You’ve finished your personal audit, you know your debt levels, how much you spent and how much you’ve earnt. What next?

Time to set some short and long term financial goals, with the longer term goals that are to be set from the point of view of the “new you” not the “current you”. Setting long term goals from your current view point will likely be small and narrow given the financial issues and likely lack of financial savvy you currently have. The “future financially successful you” will have a lot of financial knowledge and success that will enable a more expansive mindset with setting goals knowing what you are capable of with training, experience, etc.

Think about setting a goal of losing weight. If you’ve been overweight for most of your life and have little to no experience in fitness and diet you’ve probably got not confidence in setting substantial health or fitness goals aside from very small goals.

If you undertook a year of training and diet knowledge it’s likely that your health and fitness goals were a lot more expansive than the goals you were going to set before your fitness journey began. The same goes with your finances. Once you hit a small financial goal you will be pumped and want to crush your next goal, then the next one.   

            Create a new budget

The budget you’ve just completed is the budget that you spent to get yourself into the current financial mess you are in. Your new streamlined budget is one that covers your living essentials however the wastage will be reduced as more money will be directed to repaying debt and increasing savings and eventually investing.

If your current financial situation is really tight and you owe a lot of money or the repayments are onerous, reach out to debt providers and ask for a reduction or restructure of the monthly repayment that is manageable with your current income. In most cases they will be happy to help as some repayments are a lot better than no repayments. Be honest with these people and they will likely help you out.

Don’t forget to budget for future expenses such as replacing home appliances and furniture as well as future larger expenses such as a big overseas holiday or your children’s (or future children’s) education costs.

            Set up your automated financial hub

We’ve discussed setting up your own personal automated financial hub here, essentially this is setting up a transaction account where your pay is paid into, monthly expenses are debited from this account, a buffer is left in the account and the rest of the monthly surplus is transferred to a higher interest savings account and eventually investments.

The quicker you put your finances on autopilot the more time that can be spend on growing your income and investments.

6. Become more financially literate

Start consuming information about budgeting tips, savings, investing, look for people who have become successful from a similar financial situation, look for savvy apps, ideas or techniques.

Do you homework, read everything that you can get access to regarding savings, investing, repayment of debt. Don’t fall for any magic financial pills where you pay money to someone and they handle everything. This is your money so you need to take control.

Start learning about investing, learn about making more money, learn about business and about building a business. Yes by all means source the help of experts in the field however their help is in conjunction with your stewardship not them taking control and doing everything blindly. It is a partnership and all their recommendations should be explained

in detail to you and you need to make sure you understand what they are offering and recommending. If you can’t understand it then walk away and find someone else.

Invest in yourself. Find courses that can help improve your understanding and education (though only a very small amount of your budget should go towards this initially). Don’t be seduced by providers charging thousands of dollars to access their course uncovering the secrets to investing or to become rich. There is no secret, education and hard work will get you there.

Yes it’s not ideal that you aren’t in the best financial situation however this can be fixed. Hopefully these tips to get out of your financial mess work and you are on your way to financial success.  Remember this will take time and effort, however you will be rewarded if you do the work and stay the course. Get disciplined and focused, build a plan and a budget, boost your income and watch your financial success start to happen!