Times are tough. The stock market appears to be regressing on an almost daily basis. Oil prices continue to hover near all-time highs. Foreclosures and job cuts are still haven’t fallen much. Talks of recession are an almost daily occurrence. You start to notice that while your expenses are increasing, your paychecks (if you are lucky) are staying the same and bills are starting to mount. Do you seek help now in the hopes of avoiding financial disaster, or do you wait until the phone starts ringing off the hook with people looking to collect their money, or do you do nothing at all?
It is sometimes very difficult to seek out help. It means swallowing your pride, admitting that you were wrong, or perhaps even admitting to failure. If action is taken early enough, though, doing so generally prevents even more disastrous results such as losing a home or filing for bankruptcy. Help does not always come in the form of asking for financial assistance. It can be as easy as talking to someone who has been in a similar situation or working with a professional to gain a better understanding of how you got to this point, what steps to take in order to remedy it, and how to prevent another occurrence going forward.
Obviously, the worst time to accept the fact that you need assistance is when it is too late: when the bank has started foreclosure proceedings, your creditors are calling on a daily basis seeking payment, your bank accounts are negative.
If caught early enough, simple changes may be all that are necessary to begin the recovery process. Applying for a credit card that provides for interest-free balance transfers and moving outstanding balances, starting an emergency fund in a high-yield savings account, developing a budget and an action plan to pay down the debt that has already built up are just some ways in which you can start the process. No one method will work for everyone, and it may take a combination of steps for some people.
Should you decide that you need the help of a professional, choosing one that has a fee-only structure,and either hourly-based or project-based fees would be the recommended route. Using credit counseling or debt-consolidation companies not only cost significantly more in the long run, but can also adversely affect your credit score. Bankruptcy should always be the choice of last result since it is irreversible, and will take up to 7 years to completely come off of your credit reports.
It is always best to have a continually-updated financial plan, keeping a careful eye on spending habits with the goal of being able to foresee possible rough patches ahead. If something should occur, you are then afforded the time to make adjustments to the plan in order to prevent problems from occurring or at the worst minimizing the effects of such unforeseen events. No matter how you choose to deal with your finances, one thing remains clear: it is easier to admit that you need help than it is to deal with the consequences of being too prideful and allowing a situation to get too far out of hand.
So when is the right time to seek out help? Have you waited until a situation got to the point where it was unmanageable? Did you try to get out in front and attempt to cut off a potential problem before it fully developed?