How To Claw Back From the Edge of a Financial Cliff

How To Claw Back From the Edge of a Financial Cliff

Cynthia Measom  Fri, August 20, 2021

The pandemic hit many Americans right where it hurts — in their wallets. “Hitting rock bottom financially is something many people fear — and understandably so,” said Kate S. Mielitz, Ph.D., AFC, an assistant professor of family financial planning at Oklahoma State University. “To reach the point that you are struggling each month, maybe to just put food on the table, or you’re squeaking by but barely … or even have no savings, no accessible credit, no one that you can turn to for short-term or long-term assistance … those are all very scary situations.”

The good news is that once you’ve hit rock bottom, the only way to go is up. Here are some proactive steps you can take if you find yourself peering over the edge of a financial cliff and are overwhelmed with debt.

Change Your Mindset

“If someone has hit rock bottom financially, the first step is to get into the right mental mindset, said Khari Washington, broker and owner of 1st United Realty & Mortgage. “The stress, shame, and a feeling of defeat can do a lot of damage mentally.”

It’s easy to feel depressed and hopeless if you’re experiencing dire financial trouble. However, it will be more difficult to turn things around if you don’t change your mindset. For example, each time you feel defeated or have a negative thought, get into the habit of telling yourself that what you’re experiencing is a temporary setback, and you will overcome it in time.

Keep your head calm,” said Scott Spivack, marketing director at United Medical Credit. “In the event of a financial disaster, feelings of fear, grief and anger are natural. Well, you need to absorb these emotions and accept the new reality. Negative emotions like grief and fear can dent your ability to think rationally. So, it’s important to eliminate stress and stay calm in these trying situations. With a relaxed brain, you’ll be able to think clearly and make pragmatic decisions.”

Take Stock of Your Financial Situation

Even though it won’t be fun, you need to take the time to really understand where you are financially. “The first thing you need to do is to calmly and meticulously take stock of where your finances are,” said Eden Cheng, co-founder of PeopleFinderFree. “This will help you make a solid financial plan moving forward. This means taking into account any remaining income, your monthly expenses, your debt, and the amount of money you have in your savings.”

Make a Plan

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