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When you encounter financial problems, do you bury your head in the sand or face them head-on?
Ignoring money problems seems easier at the time, but it doesn’t make them go away. Instead, they fester, slowly boiling under the surface until there’s so much pressure they explode.
Confronting financial issues immediately feels painful, but it’s crucial for overcoming them and ensuring future security.
Why We Ignore Money Problems
We ignore money problems because it’s easier than facing them. When we bury our heads in the sand, it’s no longer a problem – at least not for our present selves.
Logging into your bank account to see your last few dollars dwindling away is terrifying. It’s far easier to simply not log in – that way, you can pretend everything is fine.
You can deal with the overdraft fee, bounced check, or declined charge when it happens, especially since that isn’t happening RIGHT NOW. It’s not your problem – it’s your future self’s problem.
Financial Anxiety
We also ignore financial problems because of the massive stress they create.
We secretly hope everything will work out fine when we ignore it, but that’s rarely realistic. The thoughts are always with you, whispering in your ear, making it impossible to enjoy anything without the stress following you.
Ignoring the Problem Always Makes it Worse
Kicking the can down the road to your future self doesn’t solve any of the problems. It has severe repercussions for all aspects of your financial health, including your credit score and retirement.
One missed payment can lead to late fees and dings in your credit score, snowballing a minor problem into something insurmountable. One overdraft fee can cost you nearly forty bucks, and of course, there will never be just one.
Though handling these difficult situations is hard, ignoring them makes things harder in the long run.
How To Stop Ignoring Your Money Problems
Ignoring our money problems makes them go away – if only for a few moments, but that few minutes of peace seems worthwhile, especially when we don’t even know where to start dealing with them.
But ignoring them makes them worse. Here’s how to face your biggest financial challenges head-on.
Breathe
Taking that first step to identify the problems seems overwhelming. You would literally walk on hot coals before logging into your online banking account to view the damage.
Take a deep breath. Let the stress out. You can do this.
The Situation Doesn’t Change
Some people view their financial situation as being like Schrodinger’s cat. It’s either alive or dead, but we don’t know until we look. Therefore, if we don’t look, we can stay happy thinking it’s alive.
The banking system doesn’t work like quantum physics. It’s alive or dead regardless of whether you look.
Since observing doesn’t change anything, you may as well look.
Understand Knowledge is Power
G.I. Joe taught generations of kids that knowing is half the battle.
You must identify the root causes of your financial problems. When you know why you’re struggling, you can empower yourself to fix it.
Many of our financial problems are caused by a lack of money. We don’t make enough money to pay our bills, and there’s little hope for a raise in the foreseeable future.
Others struggle with spending. They would have enough money to live a happy life, but they spend too much on lifestyle inflation, keeping up with the Joneses, or impulse buys.
Identifying the root cause of your money woes is crucial to fixing them – and you’ll never figure it out if you ignore them.
Do the Math
Understanding your money situation is far more than looking. You’ve taken that vital first step, but now you must deep dive into your finances for a complete picture of what’s happening.
Compare your income to your expenditures. Track your spending. Discover your biggest expenditures.
Review your budget, spending, debts, bills, and income to fully understand your financial picture.
Armed with this knowledge, you have the power to change your life.
Getting Your Financial Life In Order
Knowing your status should feel like a massive weight lifted. But the knowledge is meaningless until you act on it.
It’s time to get your money back on track.
These tips will help you get started.
Make More Money
Many people have financial problems because there isn’t enough money to go around. After the bills are paid, they can barely eat.
In today’s world of rapid connectivity, making extra money is easier than ever. You can make extra money writing, driving, walking dogs, helping folks around the house, shopping, and more.
A side hustle can help you fill the gaps in your income and learn new skills, which could make it easier to get a better job.
Use Available Resources
The major downside of a side hustle is that they take up so much of your time. If you have a full-time job and kids to care for, you may have little time available.
It’s okay to fill the gaps with resources designed to help you.
Apply for government programs like unemployment, utility assistance, and food stamps. Go to food banks so you don’t have to spend as much of your limited income on groceries.
These resources exist to help people like you dig themselves out of money problems. Use them to stretch your precious dollars further.
Save More Money
Many of us are in dire financial straits because we can’t stop spending. It’s time to put away the card and cut back.
Trim the Budget
Identify the things you overspend on and try to cut them from your budget. Get a tasty coffee drink weekly rather than daily. Give up the afternoon vending machine run. Bring lunch to work.
You’ll likely find a few things you’re needlessly spending money on when you track your spending.
Put Savings on Autopilot
If money burns a hole in your pocket, you may have to make it less accessible. Set up automatic transfers from your checking account to your savings account so you never see the money.
If it’s not in your account, you’re less likely to spend it on unnecessary items.
Save on Living Expenses
Sometimes, making minor cuts to your budget won’t be enough. You may need to make drastic lifestyle changes to solve your money problems.
You might need to downsize your home, trade-in your car, or get a roommate. To stay within your means, find ways to save money on living expenses like utility bills, insurance, and groceries.
Explore more ways to save money.
Account for Emergencies
Sometimes, the problem is a slew of emergencies or a string of bad luck. It can be hard to dig out from under something like this, especially when the hits seem to keep coming.
An emergency savings account is the best protection against these random events that keep cropping up. Though experts say you should have $1000 in the account, realistically, that’s not enough. Instead, you should aim for $5000 in your emergency savings account.
Of course, that doesn’t help when you’re already hemorrhaging money from back-to-back emergencies. As a financial independence blogger, I hesitate to tell people that MORE debt is the answer, but sometimes, if you’re struggling with too much debt, consolidating to one smaller payment with a lower interest rate can really help alleviate the stress and help you get your budget back on track.
If you think a personal loan could help you make your debt payments more manageable, check out Upstart. They offer personal loans to people for various reasons – from medical emergencies to debt consolidation. The best part about Upstart is that they view you as a whole person, not just a credit score.
Everyone needs a helping hand sometimes.
Digging Out
You may not need to consolidate your debt to start digging out. I’d advise against it if you can manage.
If you can use some of the saving tips from about to pay off your debt, you will be so much closer to conquering your money problems and achieving your financial goals. Although I’m not a Dave Ramsey fan, I enjoy his debt snowball method of debt repayment. With this, you first tackle the account with the lowest balance – putting all your extra money towards that debt until it’s paid. From there, you move to the next lowest one, creating a debt snowball.
It’s better than its more logical sister, the avalanche method because sometimes we need the psychological win of paying off a debt.
The avalanche method is where you tackle your debt with the highest interest rate first – regardless of the balance. This does save you money in the long run, but it can be disheartening if your high-interest-rate loans have high balances. It might feel like it takes forever to pay them off, and that can lead to giving up. If you know you can handle it – go for it! It is the more cost-effective method of paying off debt.
It’s Time To Stop Ignoring Your Money Problems
Your money problems aren’t like dogs – they won’t lose interest when you ignore them. They’re more like termites – they get inside and fester, slowly destroying everything around them until it rots from the inside out.
Like with termites, the sooner you discover your money problems and work towards resolving them, the better off you will be.
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