Financial hardship doesn’t even mean being financially irresponsible. Mostly it means one calamity after another happens, and no matter how hard we work, we just can’t get ahead.
Many of us are in financial hardship and it’s not because we’re shopaholics who overspend on consumer goods. We’re typically low-income earners who’ve been dealt a series of life-changing events where we needed to rely on credit for basic survival.
We get knocked down and it’s hard to get back up again.
Financial hardship can strike us in an instant and sometimes we spend the rest of our lives trying to overcome it.
What are some causes of financial hardship?
Many of us end up in a period of financial hardship where we can’t pay our rent and other bills.
Right now, for a lot of us, losing our jobs or having our hours cut back due to Covid-19 is a huge, financial strain.
In fact, let’s put that at the top of the list. If this was a year ago, when the coronavirus was relatively unheard of, it wouldn’t be on the list at all.
So here’s a list of things that can dry up income and cause financial hardship:
- Illness or accident
- Death of partner or someone else close to you
- Divorce (or end of a partner live-in arrangement)
- Job loss (fired or retired)
- Disaster like fire, flood, hurricane, earthquake, war
- Jail – you or your partner
- Victim of crime
I’m sure there are other things that can be added to the list that aren’t as life-changing and can still be a financial catastrophe. Many of the things on this list mean people have to use credit just to get by. If you’re unemployed or have low income this puts you on the path of financial hardship.
For me it’s often things like vet bills, car repair, or dental work that have caused me financial hardship over the years.
Moving to a new place? You need first and maybe last month’s rent plus security deposit. Don’t forget hiring movers if you don’t own a truck or know a couple of guys with strong backs. That’s thousands of dollars right there if you move to another place.
Too many times I was just getting caught up on paying down the credit card and putting a little money into a savings account, and then something happened to drag me down.
It seems I can never get ahead no matter how hard I try.
Do you feel that way too?
Financial hardship is stressful and even worse, can accelerate aging! Yikes! Check this out: https://www.medicalnewstoday.com/articles/326408#Studying-financial-hardship-and-aging
Do we need any more incentive to improve our financial situation?
Are you in denial?
A lot of people are in denial that they’re heading toward financial disaster.
Here are some warning signs that you could have financial problems:
- Gambling and other addictions. Spending more than you earn on an addiction means using credit cards to cover debts, and maybe even stealing from employers or others.
- Using credit cards to buy food and other essentials.
- Credit cards are maxed out.
- Unable to pay the minimum amount due on credit cards and other loans.
- Can’t pay the rent/mortgage.
- Not enough money to pay that month’s car bills.
- Collection agents are phoning.
- Your bank has frozen your account.
- Poor credit rating.
- Taking out high interest payday loans because you can’t get money anywere else.
- No emergency fund.
Do you see yourself in any of the above scenarios?
Turn it around
Acknowledging the problem is the first step towards turning things around. Here are 7 steps to get through financial hardship:
1. Accept your situation
You’re the victim of a romance scammer who stole your money and your heart. The money’s gone and he’s in the wind. Gone!
Your husband/wife cleaned out the bank account and ran off with someone 20 years younger. Gone and gone. Good riddance to bad rubbish but all you care about is where’s the money? Gone!
You invested all your money on a sure thing in the stock market (or racetrack) and it’s a bust (finished last). Gone!
You were fired without severance pay. Screw your boss!
Yes, it sucks because you’re probably a victim of somebody else doing something wrong. It pisses you off. Makes you madder than hell!
But it’s done. Your lifetime savings is gone. The money is gone and it’s not coming back. Accept reality. We can’t change what happened. We can’t live in the past. All we can do is move forward and make changes.
Let’s get out of the financial hardship that we call life.
It’s the right thing to do. It’s the best thing we can do, especially for our sanity. We can’t waste any more time wallowing in our misery. We need to find a way to move forward and get on with our lives.
2. Assess your situation
Let’s figure out what we have and how much we owe. We need a realistic picture of our current situation before we can create a plan to get us out of our financial hardship.
Grab a pen and paper and answer the following questions.
Do you have any remaining financial assets?
How much money do you owe?
What bills are due very soon?
How much money do you make?
How much money do you spend?
Did you create a backwards budget? That means figuring out how much money you’re spending every month. Most of that “spending” is probably housing, utilities, and groceries.
You need to make sure you have more money in your bank account than the total amount you spend each month.
If there are gaps, you need to cut back on spending in some areas or find ways to bring in more money.
3. Contact your creditors
You can contact your financial institution and service providers and find out if they offer any financial hardship programs. This usually includes reduced payments or deferments. It’s always better to take the lead and contact your bank, credit card companies, etc first to alert them of financial hardship, instead of not paying your bill and have them call looking for their money. You want to avoid having your utilities shut down and your account being placed in collections.
Most people don’t want to admit they’re in trouble until they have no other way out. If you have overdue accounts that are already in collections, try contacting them for a repayment program.
You’ll have better luck if your overdue bill hasn’t been sold to one of those scumbag collection agencies that buys old accounts for pennies on the dollar and tries to collect using threatening methods.
4. Find extra money
Any extra money you can find in a pinch will help. Right now a good bet is finding driving jobs delivering food, either groceries, or pizza and other take out. Look at Uber Eats, Skip the Dishes, and Instacart.
Look on Craigslist under Gigs. People post a lot of one time or recurring jobs such as lawn mowing. That’s where I found a part time gig here visiting a senior man in his care facility and putting a light therapy contraption on his head for 20 minutes that supposedly helps dementia patients. Sadly, he passed away due to his heart condition. But that’s just an example. I see jobs delivering newspapers and flyers listed there all the time, not to mention babysitting and cleaning jobs.
Look at Appen, a company that offers legitimate jobs you can do on your computer. I have an account with them, but I’ve never done any work. It’s free to sign up and see what they have available, and the jobs change all the time. I recently signed up for a task that involves taking dog photos on my iPhone. https://appen.com/jobs/
For inspiration, get Nick Loper’s free eBook with side hustle suggestions on Amazon Kindle:
5. Avoid payday loans and fast cash places
It might be convenient when you have an emergency or there’s more month left at the end of your money, but try to avoid fast cash and payday loans shops. No matter how hard up for cash you are!
These places prey on low-income and disadvantaged people. Avoid them!
They come with fees and high interest rates. For every $100 you borrow, you’ll be paying back $15 to $30 or more!
If you can’t repay the loan by your next payday, you renew it and the fees and interest keep climbing. The next thing you know, you have to repay more money than what you originally borrowed.
There are lower cost borrowing options such as asking your financial institution for overdraft protection or a line of credit. Not ideal, but pay it back as as soon as possible. They’re a better option than a payday loan shop, where they just keep convincing you to keep taking out more and more loans.
6. Use government or community resources
Do an Internet search for “free financial assistance” plus your location. Or try searching for “free debt assistance” and your location. Also try “free credit counselling”. You will find resources you’ve never even heard of. Most provinces and states have free services to help their citizens get back on track.
In Canada, try the Credit Counselling Society with many locations across the country. https://www.nomoredebts.org/
Even if you’re not Canadian, the resources page might be useful for your situation.
You should be able to find free or low cost credit counselling and money management services with your financial institution, possibly your church, and non-profit societies. If you’re in the states, the NFCC can help find these organizations. https://www.nfcc.org/
7. Banish your financial problems for good!
Nothing happens until you take action!
So important to remember! Take a pen and write it down on a sticky and slap it on your bathroom mirror.
Getting out from financial hardship is going to mean creating some kind of financial plan. You’ll have better success at putting it in action if you use a pen and paper to write down what you need to do.
Let’s get from Point A to Point B!
If you write down your financial plan, you’ll know where you are now, and where you want to be. You’ve already started creating your financial plan when you answered the questions above in #2 – assess your financial situation.
Your financial plan isn’t as complicated as you thought, huh?
Once you start tackling your financial issues and writing down possible ways of solving them is a huge first step. Write down a timeline when you can realistically accomplish these financial goals. For some people it might be a few months, for others it might be years.
The biggest issue is getting yourself out of debt. It is so stressful coming up with minimum payments on multiple credit cards. Trying to figure out how to come up with $400 to cover this credit card’s minimum, $200 for that credit card’s minimum, and another $300 for yet another credit card’s minimum payment. And that doesn’t even scratch coming up with the money for housing, food, and utilities.
Imagine that big sigh of relief when you no longer have that kind of debt stress in your life.
Our goal is to become debt free and STAY debt free.
Remember: Our credit cards are not our friends!
Our goal is to banish financial hardship and make our lives easier and less stressful.