11 tips for dealing with a financial crisis

The thought of checking the mailbox fills you with dread. You don’t answer your phone anymore because it could be someone collecting money. Bills are past due and your bank account looks scary. Your gut is constantly tied in a knot.

As time ticks off the clock, your bills keep piling up, and you’ve already missed a few due dates. You don’t want to panic and make things worse, but you don’t know where to start. You need a plan, and fast.

You may feel completely overwhelmed now, and that is OK. You can make this better one step at a time. The following tips will show you how to to get organized and tackle the money beast right away. Gather your courage and let’s get started.

1. Learn to calm yourself

Your ability to make sound decisions right now is vital, and that can only happen if you can calm your nerves. A financial crisis is stressful, so learning to relax is essential to this process.

Start with a simple breathing exercise. Slowly breathe in for four counts and breathe out for eight counts. Do this several times in a row. Once your body gets used to this, your heart rate will slow down. Doing this several times a day will help you lower your stress levels.

2. Gather your financial information

When you are in a calm state of mind, gather all your bank statements, bills, and your calendar. Call your bank or look online at your current balance and pending transactions. You need to know exactly how much money you have available right now.

Write all the due dates of your bills on your calendar or a list. This process will help you know what bills are coming up soonest and exactly when they are due. You are laying down the foundation of your financial situation here, so be thorough.

3. Prioritize your bills and expenses

Now that you know what’s due, list your bills in order of highest priority. You need to keep a roof over your head, basic utilities going, and food on the table. These are your basic needs, and you need to cover those expenses first.

You may have bills due right away that don’t cover a basic need. Before you pay that bill, you need to understand how far you can stretch your money on more important things.

4. Get a simple plan

Start with a simple plan so you can start taking action. Breathe and calm down, then decide which bills you can and need to pay first.

Look at your bank balance and when you get paid again. How does your available cash match up with the due dates of your most important bills? Do you have enough to cover those bills on time, or do you need to figure something out? If you’re short, you may need to get some extra cash to make ends meet.

5. Stop spending money

Stop spending money until you know which expenses are the most important. You must stop the bleeding quickly so you can keep your basic needs covered. This can be a difficult choice, especially if your income has taken a hit. Take some deep breaths, think, then spend your money wisely.

Look through your bank statement for automated payments or renewals coming up. These can be easily missed and can spend your cash when you aren’t expecting it.

6. Action instead of distraction

When stress builds up, you’ll feel like distracting yourself and procrastinating. Distraction can be a good stress reliever, but not in this case. You need a focused mind to make the situation better. Once you have a basic plan of attack, do what’s needed to cover your bills. Take the action you need even if it goes against your emotions.

Many things will require your attention as you work through this situation. Unplanned expenses will come up, something will break, or a bill you’d forgotten about will come in the mail. Keep figuring out your plan and stay on track.

7. Lower your bills

Once you’ve prioritized your bills, contact each business to see if there’s a way to lower your payments. Call your credit card companies about lowering your interest rate or fees. This can also work with mortgage companies, your landlord, and utility companies.

These businesses would prefer that you pay some or most of your bill instead of nothing. Negotiation can take some heat off your bills as you start to catch up.

8. Trim extra expenses

Start trimming the fat out of your list of expenses. This is a great time to cut cable, drop subscriptions, and stop eating out. Go back to your definition of essential purchases and question everything you usually spend money on.

Don’t worry, you can find plenty of ways to enjoy life while cutting costs. Instead of streaming movies with a paid service, see what you can watch for free. Buy generic brands, cook at home and use your local library.

9. Make some extra cash

Now that you’ve cut expenses, put more money in the pot by finding a side gig or two. First, sell your unused items on Craigslist or local selling exchange Facebook groups. Hold a yard sale with a friend or two to draw a big crowd. Have a special skill you can use? Sell your services locally and online as a freelancer.

Search newspapers and online listings for part-time work. Grocery stores, discount stores, and restaurants are always hiring. Ask your friends and family if they know anyone who’s hiring. Do odd jobs like yard work, scooping snow, or walking dogs.

10. Speak to someone you trust for support

Remember how closely tied your money and emotions are? Don’t go through this stressful journey on your own. Get some support right away from a person you trust. They don’t have to be an expert with money, but you need someone with a financial track record in your corner.

One of their most important jobs will give you emotional support. When you feel like giving up or get frustrated, they can help you settle down and think clearly.

11. Be honest with your family

Don’t sugarcoat this situation with your family. This won’t be fun, but be honest from the start. You need everyone on board with your financial plan for it to work. Explain the problem and potential consequences if your situation gets worse. Tell everyone in the family how spending and saving will change for everyone.

Then turn the mood in a positive direction and promote a family team attitude. Describe your goals and what everyone can do to help. These changes most likely won’t last forever, but it could feel that way at first. Once everyone knows how to pitch in, it’ll be easier to stay focused and motivated.

Climbing out of the hole

Getting out of a financial crisis is no picnic, but it is manageable. Stay calm and make a plan. Take action every day to meet your goal and have your support network by your side. You and your family are in this crisis and can get through it together.

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