Financial problems can come at any time with a variety of causes, such as job loss, credit card debt, or investment failure. Whatever the cause, the most important thing you can do is take a few breaths and think about getting to the heart of the problem and then finding a solution. That way, you can immediately start making plans to get back to being financially independent.
Step
Method 1 of 3: Finding a Way Out
Step 1. Determine the crux of the problem
Sometimes, the core of your financial problem is simple, like losing your job or failing an investment. However, for some people, financial problems arise because their life is "a peg rather than a pillar," and it may be hard to realize. If you suddenly have trouble paying off debt, find the source of the debt, check your expenses, and find out why you owe it.
- Make a list of your biggest financial problems. Remember that you don't have to do everything at once. Instead, try to prioritize the issues on the list, such as paying off a large debt or finding a job. Once the big problem is over, your other financial problems will be easier to solve.
- Once you've identified and prioritized your financial problems, set a deadline for solving them. For example, give yourself until the end of the month to find a job, or two years to pay off your biggest debt.
- If you are married or in a serious relationship, make sure you involve your partner in solving financial problems.
Step 2. After making a priority list of financial problems and setting a deadline, make a list of solutions that you can use to solve the problem
Know the concrete steps you can take to reach your goal, then write down those steps.
- For example, if your goal is to pay your credit card bills in two years, you should calculate how many installments you have to pay each month, and be consistent in your payments. You should also avoid using the credit card if the card has not been closed.
- If your target is finding a job, write down solutions such as reading a job advertisement daily, applying to 10 companies each week, or contacting the company you've applied to after a week if you don't hear back.
Step 3. Watch your debt
One of the first steps you can take to try to get out of debt is to contact your creditors and make sure you owe an amount that you know. If you think your debt should be smaller, contact the creditor and try to work things out with the creditor. If you can't resolve it through family channels, you may have to take legal action to get out of debt.
However, if your only problem is that you can't pay your debts, you may be able to plan a new repayment schedule with creditors. Generally, creditors will receive the option of rescheduling, instead of returning empty-handed if you file for bankruptcy. Therefore, contact your creditor, explain the problem you are facing, then negotiate a debt rescheduling
Step 4. Create a budget
A budget will help you track your income and expenses, allowing you to monitor the inflows and outflows of money. By monitoring the inflow and outflow of money, you can find out which expense items can be cut, and the opportunity to pay off debt faster. After analyzing your current expenses, create a budget to plan your monthly expenses. Allocate limited funds to certain expense items, such as entertainment, and stick to your budget.
- Check your monthly expenses. You may be quite extravagant on some expense items. Carefully examine your expenses, such as food expenses, living expenses, transportation, entertainment, etc. Then, find an expense item that is larger than it should be. You might buy lunch every day even though you can bring your lunch, or you might buy a book that can actually be borrowed at the library.
- Search the internet for information on how to create a budget sheet.
Step 5. Involve all family members in the process of solving financial problems
If you and your partner, or other family members, disagree on this process, you will have a hard time making changes. Quarrels over expenses will only waste time and energy, which can actually be used to get out of financial problems. Discuss with your family before implementing a financial plan, and make sure all family members agree on your plan.
Method 2 of 3: Executing the Plan
Step 1. Once you've created an expense budget, stick to it as much as possible
You'll be able to follow your budget more easily if you track your expenses closely, especially if you regularly check your bank account through your bank's website. Adjust the budget as needed, for example when you find that the budget for a particular post is too low or too high.
Step 2. Continue to reduce your budget if possible
After following your budget closely for a few weeks or months, re-examine your budget and find out what expenses you could reduce. For example, find cheap or free entertainment, such as going to the park, and give up expensive options, such as the cinema. Also, consider reducing your cell phone or cable TV bill by turning off features you don't need.
On the internet, there are various guides for living on a limited budget
Step 3. Ask others for help to make sure you are on the right path
The help of others will help you stick to your plan when things get tough. By involving other people, you will feel more responsible, and this is in accordance with the concept of human psychology.
- First, choose a close friend or family member you can turn to for help.
- Tell us about your financial plan, the steps you're taking to achieve it, and the deadlines you've given yourself to achieve the plan.
- Contact your chosen one periodically (eg weekly or monthly) to discuss your plans.
Step 4. Save when you receive your paycheck
This step is in accordance with the simple concept of "pay the debt first". The first thing you should do after receiving your paycheck is to set aside as much money as possible to pay off debts. If possible, activate the automatic debit feature through your bank to pay debts immediately when you get paid. Make sure your salary goes into your account before the bill is paid to prevent overdraft fees.
Step 5. If you fail, get up
Sometimes, you may spend money over budget. Even if you spend above your budget in a given month, remember that this is only temporary. If you're spending money above your budget for some reason, commit to saving more in the next week or month to cover your budget.
Step 6. Consider more extreme savings options if necessary
If you've been frugal with discipline but are still stuck in debt, you may need to take more action. For professional help, contact a debt counselor and start a debt management program.
If you really can't pay off your debt, you can file for bankruptcy. However, by filing for bankruptcy, you may be blacklisted by BI and need to attend court for months
Method 3 of 3: Keeping Yourself Away from Financial Problems
Step 1. After your debt is paid off, continue your good habits in managing finances to avoid falling back into the same hole
You're used to living on that budget for months, or even years anyway, so why change it? The rest of the money you have can be invested in a retirement fund, or a child's education fund.
Step 2. Think about your purchases logically before making a purchase, especially a large purchase like a car or boat
Know everything about the product, and find the best price for the product. You should also think about whether you really need the product, and whether you can pay for the product in cash instead of paying in installments. Paying cash will prevent you from making impulse purchases, and reduce interest expense. Avoid buying things just because they look cheap or on sale.
Step 3. Take care of your credit score
Financial health radiates from credit scores. A good credit score will help you get a lot of things, like low interest on a car or house, get a credit card with a higher usage limit, and so on. In addition, a good credit score can also make it easier for you to get a low-interest loan when you experience financial difficulties again at a later time.
Step 4. Have an emergency fund in a savings or similar account so you can easily withdraw it when needed
Most financial planners recommend that you save as much as 6 months of net salary, but saving even a few million or even a few hundred thousand rupiah can help in an emergency.
