Do You Have Money Problems? 4 Tips On Overcoming Financial Struggles
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Money problems can happen to anyone and at any time. The worry and stress that financial struggles bring can eventually cause major health and issues within your personal life. However, knowing the fact that there is a way out of these financial challenges can help lower the potential of mental health problems.
It’s important to understand the consequences of being in a negative financial situation and ways on how you can overcome these challenges.
Signs That Your Are Struggling Financially
Some people might be a little oblivious to their financial struggles. They might not be tracking their finances or they may just be too proud to admit that they are struggling. However, solving any problem begins with admitting there is a problem. Listed below are some of the signs that you are struggling financially.
- Missed or minimum credit card payment
- Not enough money to cover your daily spending
- Late bill payments
- Always seeking for a payment extension
- Increasing debt from loans and credit card
- Fear of eviction from being behind in loan or rent payments
- Experiencing legal action from debt problems
- Leaving paycheck to paycheck
- Asking others for money
If any of these sound familiar, then you should take stock of where you are financially and aggressively develop a strategy that will help you get out of your current situation.
Effects Of Financial Problems
It’s not surprising that financial problems lead to both physical and mental health problems – not only for you but for the rest of your family as well. Here are some of the negative consequences of financial difficulties.
As of 2016, the average U.S. household with debt owes approximately $135,000 according to Nerdwallet. Conversely, 72 percent of Americans revealed that they stress about money every day, and 22 percent of them felt “extreme” stress over finances.
This stress they feel significantly affects other aspects of their lives, such as their performance in their job, their ability to sleep properly, their hormonal levels and their mood. Cambridge Credit Counseling explains the impact of stress on health in their article and mention the following medial conditions that can come to the surface from high levels of stress:
- Heart Disease/Attack
- Gastrointestinal Problems
- Weight Gain/Loss
- Eating Disorders
- High Blood Pressure
- Substance Abuse
If you have children, take note that their mental and physical health might also suffer from your financial problems. Inevitably parents will discuss financial matters and often argue. Children will overhear this and see the impact financial challenges have on their parents relationship. This can create negative associations towards money for the child.
Kid’s also will be impacted by seeing that they have less than their friends. They may not be able to partake in the same sports programs or extra-curricular because of the cost. This can make them feel left out and disappointed.
In some situations, kids are asked by their parents to help out in the family business to help create more income. While this can be an excellent learning opportunity for the child, it must be balanced with sports, team activities and other social engagements.
Lower Job Productivity
Workers tend to be less productive whenever they are bothered by their financial problems. Lack of money or the pressure of bills are a major distractions and can impede performance at the work place. This can have serious consequences for jobs where safety and accuracy could mean life and death (construction, medical field, military, etc)
There can also be resentment towards the employer for not paying them sufficiently to make their financial woes go away. This can cause complaining in the work place and lead to an unhappy workforce.
Anxiety And Depression
Long bouts of financial strain can lead to anxiety and depressed. And if these set in, then additional challenges can rapidly appear such as taking medication, substance abuse, neglect and much more. This rapidly impacts the entire family and creates and downward spiral that is very difficult to get out of.
Money problems should be taken very seriously and addresses quickly. Don’t ignore the issue and how that things will improve without your conscious focus.
Tips On Overcoming Financial Struggles
You should be aware that your money problems won’t disappear without you putting real effort into solving them. Here are some tips to get started on the path to getting debt free:
Identify The Root Causes Of The Problem
The first step in addressing these difficulties is to identify the root causes of the problem. These types of issues are usually a consequence of a more significant issue from the past. Knowing what these are is essential to be able to come up with the best solutions that will work in the long run.
Listed below are some of the major sources of financial troubles:
- Increased medical expenses due to an unexpected illness or accident
- Piled up debt because of using credit for luxurious items
- Higher living expenses because of life changes (birth of child, aging parent, loss of job)
- Higher standards of living for moving out of town
- Increased spending to sustain an addiction (drug, food, shopping, etc)
- Not understanding spending and budgeting
- Poor investment decisions
There are many more reasons someone can be in financial distress but these are a few items you need to think through carefully. It takes courage and honesty to accept that these could be issues in your life but once you identify the cause you can focus on remediation.
When people think of cutting expenses they often cringe as they think it will drastically change their lifestyle. It is amazing the savings you can find when you really start looking and make an effort to cut back on frivolous spending.
The key is to look at EVERYTHING you spend money on and then decide 1) am I getting value from that expense, 2) can I find an alternative that is just as good for less and 3) how much will my life really change if this is gone. If you ask yourself these questions, you can start cutting back. Here are some examples you may want to consider:
- Transportation – When was the last time you reviewed your car insurance and seen if there are better prices out there? Do you need that high of a deductible or can make due with less coverage? Are you taking toll roads because of habit? Can you car pool? Are you shopping around for gas? Do you need a car that large or luxurious or expensive especially if you have payments or a loan?
- Home – Have you renegotiated your home insurance? Have you checked mortgage rates (and is refinancing an opportunity to save?) Are you paying above normal rents or can you rent some place closer to work to reduce your commuting costs? Are you paying for services you can do yourself (house cleaning, mowing, driveway sealing, gardening, home improvements, etc). Can you get a room mate to share expenses?
- Food – Are you shopping at a more high-end grocer store? Are you shopping for premium items? Do you find that you throw out a lot of food that has spoiled in your fridge (if so, you’re probably purchasing too much food). Are you going out for lunches (versus packing your own lunch from home). Are you going out for drinks or dinner often? Are you entertaining at home a lot?
- Technology – Are you paying a premium on your phone plan, internet access, home phone? Do you need a home phone? Have you bundled your services and negotiated for a discount? Do you really need TV and multiple streaming services?
- Health – Obviously health is important and should not be taken lightly however are you paying a lot for a gym membership where you can be working out at home for free? Have you found the most affordable drug plans or looked to see if generics exist for you specific needs. Have you looked at grants or other programs that can help? Are you getting the right coverage for your dental and medical plan.
- Other – see what you’re spending on extra curricular activities for your kids and yourself, what’s your life insurance rate at?
- Credit Card – have you called your credit card company to renegotiate what you owe? Can you refinance your home to help pay off your credit card bills?
Find Additional Income Generating Streams
There are two sides to the coin when handling money. The first one is to cost-cut on unnecessary expenses while the second one is focused on looking for additional income generating streams. In other words, passive income investments and side hustles. There are various part-time jobs that you can in addition to your current employment that can help alleviate the financial strain. Here are some examples of ways to generate more income.
Deploy Savings Into Income Generating Investments
You don’t need thousands of dollars to start earning passive income from investments. Thanks to companies like Fundrise, you can start investing in real estate (earning 10%+ yields) with as little as $10. If you can’t find $10 in your budget to invest for your future, you’re not looking hard enough.
Automate Investing Your Spare Change
With a company like Acorns, you can invest money every time you spend money. It’s that simple, if you opt in, Acorns lets you invest your spare change or you can manually invest as little as $5 any time you want into a portfolio of ETFs. If that doesn’t sound worth it to you, check out how one guy used Acorns to build a $50,000 portfolio.
Create And Sell Online Courses
If you feel that you are an expert in your field, why not use this knowledge and translate it to something beneficial? You can make online video courses and sell these on the internet. Udemy is a very popular and easy site to use. All you have to do is make your course video and upload it on educational websites that will promote your content for a commission.
Offer Resume Or Other Freelance Writing Services
There are tons of vacancies around the globe, and hiring employees only have around 2 to 3 seconds to glance on a resume. Hence, more and more applicants are concerned about whether their resumes stand out or not. You can check out websites like Fiverr for resume writing jobs. As a resume writer, your role is to draft an exceptional resume to highlight the applicant’s achievements and skill sets.
Create Monthly Budgets And Track It
Finding more money and reducing expenses if great but you also need to understand the big picture. Having a budget is critical to help understand what money going in and out and what is left as discretionary income.
There are a few philosophies on how to create a strong budget but I found the best one is the “Forced Savings” approach of the 50/30/20 rule.
Start by looking at what you post-tax income is. Take 20% of that amount and put it directly into your savings or investment account. This money should stay untouched unless there’s an emergency. You can add to this by having your employer automatically deduct a certain for your retirement account so that you never see the money and it’s a forced savings.
Then what you have left is your budget to work with. Divide that by 12 and that’s the monthly amount you can spend.
Look at what you’ve spent over the past 2 years on a monthly basis and see how that compares to your monthly budget. If you spend more, you need to make changes immediately.
Continue through the process we identified about to lower your expenses and continue to find new and more ways to bring in additional income until everything balances.
There is no silver bullet that will miraculously take you out of debt. You have to put in the time and effort to uncover the root cause and put a plan in place to proactively solve your issues. The benefits of being stress-free far outweigh the time and commitment required to get things straightened out. As with most things in life, all you need to do is start.