Recovering from a Large Financial Loss

There’s nothing more devastating to your financial situation than to experience a big setback that strips your savings and potentially leaves you with a debt burden. Luckily, there are steps you can take to ensure that the recovery is a smooth one. In this podcast, we will make recommendations for how to move forward and and prevent these situations from occurring again.

Transcript

Steve: Welcome to the CredAbility [now Clearpoint Credit Counseling Solutions] podcast. Along with your host Mechel Glass, here’s Steve Moore talking today about what to do if you’re hit with a large financial loss.
Steve: Well, Mechel our country finds itself in a unique situation and there are lots of people who are losing their jobs and finding themselves in a tough financial position so if you have had a large financial loss how do you respond, what do you do next?
Mechel: Well, if you’ve had a large financial loss, then if you have an emergency account now is the time for you to tap into that account. Then you want to evaluate if you can downsize your lifestyle in any way, any subscriptions that you may have, you want to cancel those if you can without penalty, if you can downsize your car that would be another big expense.
Steve: So review your entire lifestyle, maybe move to a smaller home if that’s what it takes.
Mechel: Maybe even reevaluate where you’re living, if you’re living in an area that is very expensive, now is the time to reevaluate those types of things.
Steve: Okay.
Mechel: And you may want to consider some things that you weren’t open to before. Let’s say getting a roommate, or if you have a basement that you’re not using maybe rent out the basement. If you have a skill, think about tutoring part time adults or children. You can also sell some things – having garage sales or using eBay as a vehicle for selling things. Those are just a few ideas to help bring in some additional cash during this tough time.
Steve: Yeah, because there are two sides to this equation, what are the things I can cut out and what are some ways that I can make some extra cash, right?
Mechel: That’s exactly right, working some additional hours, getting a second job, maybe not in the same career that you’re in but in something that you may not have thought about before. You can also talk to your family and friends about the situation. Don’t hide it from them, don’t let them think that you’re still making the same amount that you were, but let them know what’s going on; they may be able to offer some additional tips. And you want to call your creditors, try to work with them, don’t avoid them, let them know what is going on and they may have some plans that they can work with you to help you through this tough time period.
Steve:How do I determine what bills to pay first if I have to prioritize?
Mechel: You want to pay your essentials first, meaning food, your utilities, make sure your housing is taken care of and you’re going to need your car, so make sure you make your car payment so you can get back and forth to work. If you have some child support that you have to pay, you want to make sure you prioritize that as well. Then you want to get to those other things like the credit cards or the cable, those things that are not necessities.
Steve: And of course we have lots of free sources. Quickly run down those priorities for us one more time.
Mechel: You want to set some financial goals for yourself. You want to live on less than you make, review what things are necessities and what things are just wants. Live on a budget, follow a priority spending plan is what we like to call it and consider some expenses that you do have some control over like those utilities and subscriptions and your groceries and clothing and no vacations for a certain time period, okay?
Steve: Thanks Mechel.
Mechel: Thank you.