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An Honest Look At The Personal Finance Crisis

How does it feel to be in a personal financial crisis?  “You know me… I am in your friendship circle hidden in plain sight. My clothes are still impeccable — bought in the good years when I was still making money. To look at me you would not know that my electricity was cut off last week for nonpayment. But if you paid attention, you would see that sadness in my eyes — hear that hint of fear in my otherwise self-assured voice.”

Social Media

Too many people feel the need to fake appearances, to appear ‘normal’. Social media makes us feel like we are not enough if we are not posting pictures of family holidays, new cars or parties.  In reality, so many people are facing a personal financial crisis but why are we afraid or ashamed to talk about it or to seek help.

Dealing With A Personal Financial Crisis

You are not alone, there are many people who are currently in a personal financial crisis. Try following these steps to help gain control over your financial situation.

1. Be aware that negative emotions are normal. Before addressing the financial elements of a personal financial crisis, it is important to address the emotional elements. You have to recognize that emotional turmoil is a normal component of the process. Depending on the cause of your situation, you may experience stress, depression, or anxiety. This may be accompanied by a sense of guilt or failure.

2. Focus on accepting your financial situation. When faced with a difficult situation, people often try to deny or ignore the situation. While it may feel better to do this, it does not help in the long run. Accepting your situation can empower you to face your difficulties as they are and conquer them head-on.

3. Talk about your situation. Confide in close friends or family members to talk out your worries and work out possible solutions. Your confidants may be able to offer advice from their own experiences or those of their friends. Not only does this provide emotional support, but it exposes you to different and potentially more productive ways of approaching and dealing with the situation.

4. Be honest with your family. Let your loved ones know that you are going through a financial crisis. You may be surprised who might offer you a loan, and even if your family is not in the position to provide you with financial assistance, letting them know what’s going on could result in significant stress relief.

5. Commit to staying positive. Before making a plan to remedy your situation, make a commitment to focus on the positive. Think about it this way: while the cause of your situation may not be under your control, how you choose to react to it is.


1. Determine your assets. The first step to resolving a financial crisis is to get a clear picture of your entire financial situation. Begin by looking at your assets, which can be simply defined as what you own. Assets are a source of financial strength. They typically include any value you have in your home, cash in savings accounts, any value you have in a car, and any money in retirement or investment accounts.

2. Determine your liabilities. Liabilities refer to your debt, or more simply “what you owe”. They are the opposite of assets. Liabilities include credit card debt, lines of credit, mortgages, unpaid bills, student loans, and your car loan.
Calculate your net worth. Your net worth is simply your total assets minus your liabilities. This is the figure that represents how much is left if you were to sell all your assets to pay off your debt, and is a good figure to describe your current financial situation.

3. Determine your income. Once you know your net worth, it is now necessary to look at your income and expenses. Knowing what these are can help you determine whether or not your net worth is shrinking or growing, and affects your path to recovery.

4. Determine your expenses. In order to alleviate your financial crisis, you need to have a good idea about where and how you spend your money. The best way to determine how much money you are spending is to review your bank account statements from the last three months. Make a list of how much money you spend on utilities, food, housing, fuel,  clothing and entertainment. Once you know where your money is going you can make adjustments geared towards decreasing the amount of money you spend so that you can get back on your feet.

5. Determine your monthly net income. If you subtract your expenses from your income, the resulting number is your net income. This represents how much you have left over at the end of the month. If this number is negative, it is a sign that reducing your expenditures will need to be a critical component of your overall plan to restore your financial well-being. However, if your monthly net income is negative because you are receiving a very small amount of income each month, it’s more necessary to increase your income than cut your expenses.

6. Assess the consequences of your situation. In order to motivate yourself to get out of this financial crisis, you’ll have to remind yourself why you want to improve your situation.  Think about how just sitting back and settling into your new financial situation will hurt you and those around you in the long run.

Implement Your Recovery Plan

After you’ve decided on a recovery plan, whether that is getting a new job, reducing debts, debt counselling, or some combination of those, get started as quickly as possible. The longer you delay, the more your debt will pile up. Take every step you decided on as quickly as possible.

Consider Debt Counselling

If you feel overwhelmed, consider consulting debt counselling services. These services can help you make and plan and work with creditors to restructure your debt in a way that fits within your current means to pay.


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