If you and your family are facing financial problems, you understand how easy it can be to fall behind on your finances. In many cases a financial issue is just temporary caused by an unforeseen bill or temporary lay-off, but losing one paycheck can have a ripple effect on your monthly budget and bills. Knowing how to get yourself back on track after a financial downfall will help you regain financial power and peace of mind.
Most family financial problems are not something that happens overnight. It is generally caused by something that is impacting the amount of money coming into the home. Credit cards allow many people to live above their means and when the high balances arrive in the mail at the end of the month, many people can only afford minimal payments. This causes a high debt load that can last for years. Having an adjustable rate mortgage can fluctuate mortgage payments causing many homeowners to fall behind. Missing a payment or two on your automobile can also cause you to accrue late fees and face repossession.
As if being behind on credit cards, auto loans and your house payment isn’t bad enough, having financial difficulties can have a ripple effect that can last years. Carrying a high debt load and being late on a few payments can directly impact your credit report and FICO score, notes My FICO. This score pulls information from all three credit bureaus —Transunion, Equifax and Experian. Information includes late charges, amount of debt, age of debt and how many open or closed accounts you may have. If you face serious financial problems you may not be able to qualify for a new loan, refinance, mortgage or car insurance. It may also be hard for you to find a job as a result of a poor credit history. Creditors can sue you resulting in judgments against you and you may also lose home through foreclosure.
One of the biggest causes of financial problems is job loss. Whether it’s permanent unemployment or just a temporary job loss, if the amount of money you bring in is less than what you are used to you can easily fall behind. Maybe you have had an illness that has caused you to lose time from work or be unable to work in the future; this can cause you to experience financial issues and mounting medical bills. In some cases, poor spending habits, gambling, substance abuse problems or mismanagement of funds can cause you to rack up credit card bills and not pay your bills on time.
If you are experiencing sudden financial problems, don’t hesitate to get help. The Federal Trade Commission states that you should develop a budget within your means. Stick to your budget and allow yourself to pay down debt, save money and get caught up on your basic bills. If you are behind on revolving credit accounts including your auto and your home, contact your lender immediately and ask for a payment extension or payment plan, this may help avoid foreclosure, court action or repossession.
When you experience financial problems, you want to make sure you can get your debt under control. Being able to pay your bills on time helps relieve stress and allows you to regain a sense of stability and security for your family. The FDIC reminds consumers to be practical with their spending and set limits. Review your spending and set goals for your financial future.