Line in the Sand: Starting Over Again Financially
Sometimes, you might wish you could turn back time and do things differently, as there are numerous things that can go wrong in your life that manage to create their fair share of financial turbulence.
If you find yourself having to start over again and build up your financial strength from the bottom there are definitely some key ways to set about that task so that you can get back to where you want to be as quickly as possible.
Here is a look at how to draw that line in the sand and start over again financially, including an overview of what can create that scenario and what you need to do to start repairing the damage.
Time to look forward
There is no denying that it feels like a monumental task to try and rebuild your financial strength if you get virtually wiped out and have to start over again.
There are several key reasons why you might find yourself in a weak financial situation, including getting divorced, losing your job, and letting things slide to the point where you end up in bankruptcy.
Regardless of how you find yourself in that position, to be able to move forward and take a positive approach to building your financial strength up again you need to draw a line in the sand and look forward to the future rather than letting past mistakes cloud your thinking.
To address any short-term funding needs, people like Cigno Loans can help, but you also need to have a strategy for taking incremental steps forward and following a recovery plan.
A home you can call your own
If you have found yourself in a position where you have had to give up the security of owning your home by either selling your property voluntarily or having it taken away it is going to take a little while to put yourself back into homeownership.
It is a good time to remember that owning your own home is not always the great investment it is perceived to be and the interest rate charges can mean you wonâ€™t be accumulating wealth that quickly, or at all, in a benign real estate market.
You will probably want to own your own home outright by the time you retire, as it gives you more options and reduces your overheads when your income drops or when you stop working. So, work on a plan that gets you where you want to be without worrying about your loss of ‘owner status’ in the short-term.
If you have been in bankruptcy, it is going to take about seven years before you qualify for a home loan again so work on putting as much away as possible toward a large down payment and plan to take out a loan that ends when you retire.
Live well, for less
If you have suffered a financial setback it is actually the perfect opportunity to take a good long look at your expenses and lifestyle and see how you can achieve a good balance of keeping a tight handle on your expenses while embracing and enjoying a more frugal life.
Getting a more economical car, lowering your living costs and finding alternative ways to enjoy the things you like for less money will all combine to ensure that you make the most of the money you have.
Crucially, if you manage to cut your living expenses this will free up more cash that can be diverted toward investments and savings that will help rebuild your financial strength.
Restricted access to credit
If you are in a situation where your credit score has taken a beating by a financial disaster you may well find that you need to operate for a couple of years without having access to credit cards or other lending options.
It can take a little while to repair your credit rating but the positive way to think about this is that being forced to survive and organize your finances without the safety net of credit can actually be a good thing.
It will help to instill a more disciplined approach to borrowing money and just think of the interest charges you will be saving when you are not borrowing any money.
Delay your social security
Finally, a good tip if you find yourself starting over financially when you are over 55 is to try and wait until you hit 70 before you start to take your social security benefits.
If you can carry on working and wait until you make your 70th birthday this will mean you get far more income than if you collect earlier, so try to wait if you can as it will give you a stronger financial position later in life.
Starting over again financially can be a shock to the system, but there are is almost always a path you can follow to get your money mojo back quicker than you might have thought possible.
Ethan Newton shares his personal finance advice and tips online, using his own personal experiences to help others avoid the same mistakes, or fix the problems faster. His articles appear on a range of personal finance blogs.