Are you facing a financial disaster right now? It is not uncommon for this to happen – many people face financial strife from time to time, and when it happens, it can lead to panic and fear about the future. It could be a stock market crash, the loss of hours at your job, or a rapid increase in your rental payment. No matter how severe it is – divorce or the death of a loved one – or how challenging it may seem to overcome, there are several steps to take to help you get through it.

Causes of Financial Damage

The first thing to do is to recognize what causes financial damage. There are numerous potential causes, such as:

• Medical debt
• Economic crisis
• Financial insecurity
• Loss of a job
• Loss of investment

Examine the root cause of your financial difficulties. For instance, job loss might stem from a lack of advanced skills or necessary certifications. In other cases, inadequate health insurance could lead to medical debt. While some financial crises are unavoidable and sudden, it's essential to understand which you could have avoided and which occurred through no fault of your own.

Understanding Financial Damage

When you face financial damage, it helps to fully understand what that damage is and how impactful it is for your future. How much money will you need to recover from this financial loss? You may need help for a short time, or you may need to consider a longer-term change to achieve better outcomes.

You cannot change past events and may have to accept your situation. And that means your next step will be in a positive direction. That is, instead of putting more energy into worrying about why this happened, it's time to put that energy towards recovering from the challenges.

Initial Steps for Assessment

One of the first steps in assessing the situation is to consider your objectives. Your goals are similar to what they have been: to meet your financial obligations, have some spending money, and save for various expectations and desires. Once you realign your goals and ensure they remain on track, you have a destination to work towards. That will help you create a map or strategy to do just that.

Analyzing Your Finances

Before creating a plan, you need to know where you stand. Take inventory of your financial situation. In short, you have to:

• Know what resources you have to work with right now.
• What liabilities do you have – or debts must you meet?

Here are some questions to help you get back on track and a forward path.

• What assets do you have that you can access if you need to meet financial obligations? For example, that could be an emergency savings account or tapping into your savings.
• How much money do you need to get caught up and out of the financial disaster right now? For example, that may be the cost of the emergency repair you had to pay for.
• How much did you spend to get out of the situation?
• How much money are you bringing in each month? How long will it take for you to recover if you do not work any additional?
• How much flexibility do you have to work additional hours at your current job?
• Are there any legal implications to this situation, such as falling behind on child support or government-ordered payments?
• What is the implication to your credit score if you do not get out of this situation quickly?

Creating a Plan

Now, it's time to create a plan to move forward. That plan to get you moving toward financial recovery must be specific to your situation. Here are several steps:

• Start solving any situation where your home or utilities are at risk.
• Make any payment to get on track.
• Determine how to adjust your budget to have a bit of "give" until you recover, such as cutting back from savings or recreational spending for a few months.
• Determine how much more you need to make each month to pull yourself out of the financial hole you may be in.
• Think about the long-term next. Is there anything you can do to prevent this from happening again?

Seeking Professional Help

Creating a plan to get out of financial damage takes time and experience. That is why it is often beneficial to turn to a financial advisor to offer some help and guidance to you. They can help you escape the immediate situation and provide you with tools to move toward long-term recovery.