Financial Crisis

Are you or someone you know dealing with a financial crisis or have one coming on the horizon?  If so, this post is for you.  There are many things that can precipitate such an event.  Anything major like a job loss, severe income reduction, injury, or personal crises such as divorce, or death of a loved one can cause it.  But also something as ordinary as chronically overspending, not paying attention and being sloppy with your handling of money can too.  No matter how you got into the mess or whose fault it may be, the fact remains you are there and there is nothing you can do but go forward.  So what can you do going forward to minimize the damage?

1.  Do NOT under any circumstances completely ignore phone calls, letters and demands.  This will only make things worse.  Set boundaries as to how often you will talk to them.  Once every week or two is usually sufficient unless something suddenly changes.  Having good communication with them can actually slow down or stop their proceedings until you can work out a deal and get back on your feet.  Ignoring them will only speed up the process and lead to wage garnishments, which will cause further damage.

2.  Establish good communication with the lenders, collectors and/or attorneys you're dealing with.  Be up front and completely honest with them.  Share your budget with them if necessary to show you are serious about solving the problem.  It will take some doing but you will eventually find someone who will work with you, even if that means being sued and talking to the attorney in charge.  This holds true if you facing foreclosure, repossession, lawsuits or wage garnishments.

3.  Decide what you are going to do.  No matter what you're facing you have to decide whether you are going to fight to keep the house or car you're behind on or let it go.  If you decide to let it go, try to sell the item before it gets taken by the lender.  A short sale is better on your credit than a foreclosure and it's better than just walking away.  If your car is repossessed they will sell it at auction for a fraction of what it's worth and then come after you for the difference.

Here are some guidelines to decide:

If you weren't behind can you reasonably afford it?
Do you really need the item? Or can you downsize to a cheaper vehicle or living situation?
Can you work out a deal to catch up the payments?
Does keeping it stress you out more than letting it go?

Depending on how you honestly answered these questions then as painful as it may be, you may need to consider letting it go.  Every case is different and what's best for one might not be the best for another.  Just  remember two things.  One, relationships are more important than a house or car, and two, do your best because that's all you can do.  It will be stressful and take a lot a work but you will eventually come out the other side.

Choices

Eleanor Roosevelt said, "I am what I am today because of choices I made yesterday."  This got me thinking about the choices my husband and I have made over our 10 year marriage, and our lives before that.  All of them, both good and not so good, have made a difference for where we are today.  I know I've written about his before but I want to share it again.  5 years ago we made the major decision to get out of debt.  At the time we had student loans, a car payment, and a home improvement loan.  It wasn't an easy road to pay that off, but we made the choice month after grueling month to work toward that goal.  Yes, we had some financial set-backs.  Our air conditioner died and had to be replaced, we had our second child, and our house flooded.  Even in the nearly 3 years since we got out of debt we've had challenges.  Our third child spent 2 weeks in the NICU, my husband totaled our van and then earlier this year we took a significant loss to sell our home that was too small for our family.  My point of sharing this is not to toot my own horn or say, "wo is me" because everyone has successes and challenges. My point is that we are an average family with an average income and if we can do it, you can too!  Choices add up. What we did yesterday is manifest today and what we chose today will determine our tomorrow.

Quotations of the Month August

"Progress means getting nearer to the place you want to be. And if you have taken a wrong turn, then to go forward does not get you any nearer. If you are on the wrong road, progress means doing an about-turn and walking back to the right road; and in that case the man who turns back soonest is the most progressive man." ~C.S. Lewis

"Even a mistake may turn out to be the one thing necessary to a worthwhile achievement." ~Henry Ford

"Don't judge each day by the harvest you reap but by the seeds that you plant." ~Robert Louis Stevenson