Money Crisis: Counseling Information on Overcoming Debt and Financial Instability

PORTRAITS

Leah’s credit card debit is out of control.  She just can’t get herself to stop spending and is overwhelmed by bills that she cannot pay.

Gene lost his job and is currently looking for work.  The job market is tough and he is struggling to stay afloat without a steady income.

Susan’s husband just left her for another woman.  After negotiations, she is left with practically nothing in the divorce.  In twenty years of marriage, she never had to work.  Now she has no idea how to make ends meet.

DEFINITIONS & KEY THOUGHTS

A crisis is more than a tragedy; it is also a turning point.  A crisis is a state of instability that leads to purposeful change.  And so, there are actually good things that can come out of a crisis.  When it comes to a money crisis, a person who wishes to fix it will likely need advice about handling their burdensome financial situation as well as an understanding that everything will eventually be all right.  Lifestyle changes can be made to help with the crisis and to prevent it from reoccurring.

ACTION STEPS

1. Get your perspective back.  Realize that money will not solve all of your problems and although you may need some at the moment, it is important to keep on living your life.  Do things that are free and enjoyable like talk with a friend, play with your children, or go for a walk.
2. Deal with the immediate problems.  When facing problems decide what changes or sacrifices might be needed in the short term in order to deal with the crisis.  If necessary get professional help, make calls to set up payment plans, stop credit card use, or cut up as many credit cards as possible.
3. Develop plans for handling payments and bills.  Create a budget by beginning with your income, figure fixed payments, regular monthly expenses, and then other monthly payments.  Begin by paying minimum amounts on each of those.  Next, list all of your other expenses from lowest to highest and determine how much money you can put toward paying off these other bills.  If you can only pay the minimum amounts necessary, start there.  Once your lowest bill has been paid off, begin adding the amount that you were paying for it to the next lowest bill on your list, and so on.  Eventually you will be paying greater amounts of money to your largest bills.  Last, make a worksheet of all of your bills and their dues dates that you can utilize each month so that you can check off each of your payments as they are completed.
4. Brainstorm where help can come from.  Think up additional ways to make additional money to help lessen your debt.  Consider taking on a new job, getting a loan from family or friends, getting help from the government, obtaining advice from a professional to help keep you on track, taking out a home equity loan, refinancing an existing mortgage, or selling something of value.  However, be sure that any additional money you make is put toward reducing your debt and not raising your standard of living.
5. Set new parameters and priorities.  Determine what needs to change and where your belt can be tightened.  Do not create any new debt and only use credit cards for true emergencies. Think about what your needs versus your desires and prohibit purchases over a specific amount of money for thirty days- sometimes you won’t even want to purchase the item after that period of time.
6. Be patient.  Your money crisis is not permanent, it is simply a turning point and it will get better.  Do not be ashamed of your situation and keep optimistic.