In our Make Credit Work For You spot this week, we look at how to dig yourself out of financial strife. ‘Repairing Financial Damage’ was written by Fran Sidoti over at Savingsguide.com.au. We hope it helps if you are experiencing some financial difficulties.
Repairing Financial Damage
No matter how good we are with money, life can tend to get in the way of our best intentions sometimes. Whether you’ve had to dip into savings or accrued some debt on your credit card, it’s very easy to get in a spot of financial bother. If you want to dig yourself out- and pronto- here are some things you can try.
Set Financial Goals
Probably you already have some. But it’s worthwhile revisiting them, to reconfigure what you want from your finances and how you intend on getting there. Are your financial goals the same as they were 6 months ago? Has your financial situation altered, without you changing your financial set-up? Write out your short, medium and long-term goals, it doesn’t even matter how far-fetched they are. Writing out our goals is the one area in life where we can be as unrestricted as we please.
The Road Map
Now, how do you intend on achieving those goals? Was your budget a bit too stringent, or perhaps a bit too lax? Is your financial situation sustainable? If you feel as if your set-up isn’t tenable, then what needs to change? Perhaps your expenditure is too high or you need to consider other income sources to get you where you want to be in 5 and ten years time.
Financial Fix Up
Probably your short-term goals are now a bit different considering you’ve got a couple of things to fix up. If you’re looking to restore depleted savings or pay off a bit extra on your credit card, analyse what you can change in the short-term to clear yourself as quickly as possible. What expenses can you cut down on? It’s amazing to think that organising your food for the week- for example- could be enough to pay an extra $100 into your savings or credit card, and get you well on the way to recovery. If your expenses are already as tight as they can be, look at ways to earn some extra income for the short-term. You could check out freelance work, or write some blogs online. Maybe a couple of weekends helping out your mates would do the trick.
If that isn’t going to fix the issue quickly enough, or if you’re paying high interest, think about consolidating your debt into a loan and having a structured repayment plan, It could give you the consistency you need to organise your budget and will almost certainly allow you to do at a lower interest.
The worst thing to do would be to beat yourself up about it. Like all things, having rock solid finances is an ongoing process and no one has it perfect all the time. Things happen, and feeling negatively about the situation is only making your life harder unnecessarily. Negativity will also make it harder to approach the situation and make it all the more tempting to stick your head in the sand. Better to reflect on the positive changes you’ve made to your finances, and how you are now completely equipped to deal with the setback. We get better at salvaging a challenge every time and although we’d all like to never have one, the chances of smooth sailing all the time are slim. So get back on the horse and you’ll be right back on top sooner than you think.
If your credit file has met with some setbacks during the process, then you will want to reflect on what to do for your future. It really depends on where you want to be over the next five years. Your credit file will show up with any credit defaults for the next 5 years, and any late payments for the next 2 years. If you have a major financial goal you want to achieve over the next 5 years, such as buying a property, or a business venture, then you’ll need a good credit rating to borrow. You may be prevented from accessing mainstream credit (at affordable interest rates) if you have bad credit. All may not be lost though. Depending on the circumstances surrounding your default you may be eligible for credit repair. To check this out, you can contact us on 1300 667 218.
For more information on credit repair and how we might be able to help clear your credit file permanently, visit our website www.mycra.com.au.
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