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You will likely face a number of financial transitions in life. Some may be welcomed and others, not so much. Since a “Not Welcome Here” sign can’t keep things like the loss of a job, a divorce, natural disaster or death at bay, we want to share our best coping advice for when life throws you a financial curve ball.
Remember, Haste Makes Waste. People in crisis often want to spring into action to fix the problem. Making financial decisions immediately after a crisis is rarely required and can often lead to costly, emotionally-charged missteps. Take your time.
Gather Data. Take an hour or two to: (1) estimate your current net worth, (2) get a handle on your cash flow (what’s coming in and what’s going out) and (3) gather all financial or legal documentation related to the crisis. You’ll need this information to help make informed decisions and identify your best options.
Go Pro. Once emotions have leveled, it’s time to get help. We don’t mean from well-meaning friends and family. Seek the help of a professional. An hour of an attorney’s time can pay off in spades if he or she helps you negotiate a better settlement or identifies valuable alternatives. Time with a financial planner may prevent irreversible and costly transactions. Consider this money well spent.
Take Action. With crisis comes awareness and awareness alone can improve your financial security. Perhaps you’ll get a better job, beef up your emergency fund or learn to save more. Even if you aren’t able to get back to even after a crisis, there is usually a way to achieve some financial security over time. Perhaps you’ll go back to work, work longer, downsize your home or decide to lead a simpler life. Take the advice of a financial planner to get you on your new track.
Last, but not least, remember to be patient and kind to yourself as you navigate through your new normal.