I would be lying if I said I haven’t made a mistake a or two during my journey to becoming debt free. In fact, there have been some months where it feels like I do nothing but make financial mistakes! In one recent month, I spent more money attending a wedding than I had planned, had car problems that drained my emergency fund, eventually had to buy a new (to me) car, and had medical issues that my insurance company refused to pay for so I had to pay for them with a credit card. But, I refuse to let those mistakes define me and undo all of my progress.
Here are the ways I’ve learned to bounce back from a financial slip-up, and I hope they will help you if you’re going through something similar.
Give yourself grace
I am not the first person to make a financial slip-up, and neither are you. It happens to everyone. Instead of beating yourself up over the mistakes, which are often at least partially outside of your control, just accept them for what they are. If you are seriously struggling with depression over your financial mistakes, seek professional counseling from a community-based or religious organization.
Make a plan to fix your mistakes
Determine how to move forward and correct your mistakes. Sometimes mistakes are much easier to fix than you might realize, especially if you are starting to panic. Take a deep breath and think of the simplest solutions first. For example, if you incurred credit card debt from excessive shopping, you might be able to return the unused merchandise to get your money back and thus lower your debt total.
However, sometimes you can’t immediately rectify the situation. This happened to a friend of mine, who loaned thousands of dollars to a family member by taking out loans of her own. Unfortunately, she couldn’t un-sign the loans, so she decided to get a second job in addition to her full-time job to pay off the debts. She will be the first to admit it was painful and exhausting, but it’s water under the bridge now.
Determine how to prevent the situation in the future
Sometimes, there is no way to prevent the situation, like with my medical issues, but many situations are avoidable with a little planning and change in behavior. For example, I used to have a problem with spending money at bookstores. It was not uncommon for me to walk into a bookstore and walk out $100 poorer. So, I made it a goal to read all of the books on my bookshelf before I buy any new ones. In fact, I don’t even go into bookstores anymore so I’m not tempted to buy more books.
Have an emergency fund
There will always be a situation that you just can’t predict. That is when an emergency fund comes into play. At an absolute minimum, you should set aside $1,000-$2,500 so that when future emergencies occur, you won’t have to swipe a credit card. This is actually one of my top financial goals right now. You should read Clearpoint’s tips for starting an emergency fund, which goes into more detail for creating a robust, long-term fund.
Plan for small indulgences
Back when I was on my weight-loss journey, I learned that sticking to a hard diet and eating absolutely no sweets ever was impossible. I would eventually give into temptation and then feel guilty for it. Things changed when I started planning for small indulgences. I never went overboard, but let myself have a sweet treat here or there. The same is true in finances. When I stick to a very tight budget, I feel deprived and eventually just cave. So even though I am working tirelessly to pay off debt, I still plan for things like attending concerts with friends or splurging on a Crossfit membership. As the saying goes, “everything in moderation.”