Getting Over a Financial Difficulty or Set Back

When faced with financial struggles or difficulties, we need to pause and take time out to reflect on what could’ve happened. We may need to re-think and evaluate our financial concerns. Here are few things that we may need to ask ourselves and it might help us resolve and get over such financial difficulties.

Have we determine our financial priorities?

 When we are recovering from a personal setback, establishing financial priorities will help us focus our effort and resources. Not all of your household debts will equally impact our families. Our first payment priorities should be bills associated with our essential needs, including utilities, food, mortgage or rent, and insurance. While we may be able to find ways to save on all of these bills by cutting back and negotiating lower rates, paying them is extremely important.

Can creditor hardship programs help us with our credit card debt?  

If our debt is all over and can no longer make a better option to pay, we can get professional help by asking the lender for a payment arrangement. Some lenders offer programs to help in re-structuring the debt and payment.


Victim of Identity Theft, made you in the “red” zone?

If there is a suspected fraud activities on your account, do not hesitate to call your bank to investigate. It may take some time for the results, but it will be worth the long process, financially. You can also ask for a fraud alert.

 How to keep insurance coverage if become unemployed?

Things that we cannot control happens – in such cases, we need to be prepared. We can check with the insurance provider if we have the right to extend your medical coverage, usually there is. Under these rights, insurance payments will likely be significantly higher than they were when still employed, but they will be lower than similar coverage obtained on our own. Having appropriate health insurance coverage is essential because without coverage, a medical emergency could devastate our finances.

 “What is voluntary and involuntary repossession, and how does it affect our personal credit?” 

Some loans are secured with collateral, such as a vehicle. If the terms of a secured loan are not met, the financial institution may take back/repossess, the collateral. When the consumer takes the initiative to return the object—before the financial institution takes it—it is called “voluntary repossession.” Both types of repossession, voluntary and involuntary, affect our personal credit in the same way. The only difference is that if we voluntarily return the collateral, we could save on some fees associated with its collection. Either way, the derogatory notation will remain on our credit bureau file for certain years.

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Personal Debt Management

When one says, “debt” it always connotes of negativity. But, in reality, there are plenty of positive aspects of personal debts. We have to realize that only few of us could purchase a home, car, or attend college without any sort of “credit”. But, you have to make debt work for you, not against you!

Before taking on any personal debt, you need to understand the terms first. Of course, it needs to be paid at a certain time table and it goes with an interest cost. But beyond paying the amount, terms of each lender widely varies. And it will be dependent on the type of debt or loan you are taking.

HOME MORTGAGES. – You need to check your capability of payment first, how much can you shell out upfront and how much the monthly amortization will be. Make sure you understand the portion of your principal payment and the corresponding monthly interest cost, and for our escrow account. If you will pay more than the minimum amount, you have the option to choose whether the extra goes to the principal, extending your payments or the escrow. But you have to make sure that your lender have applied your payments properly.

CREDIT CARDS. – Make sure that you understand the terms and conditions of your credit cards. And BE RESPONSIBLE in using your card for each purchase. It is really tempting to use your card on all your purchases, remember that there is a high-inters cost that goes with it if you falter in paying on time. And the amount compounds! There are cases that credit card users pay more than the interest from the purchase itself. Paying off in full on the monthly credit card balance should be your ultimate goal. If you can’t, then put limit on all your purchases.

Also, beware with some of the offers you receive in the mail. There are credit card providers that will mail you checks that can easily be used. BUT, usage of these checks are considered as “cash advance”, which is often has the higher interest costs than the already high cost of regular credit card purchases. If you receive these checks, shred or better yet, burn them immediately to avoid being tempted in using them!

CAR LOANS. – There are different loan terms when you apply for a car loan. Though increasing the loan term usually decreases the monthly payments, if you can, try to take the shortest car loan term if possible. Most of the time, car loan terms which is sometimes can go as long as six (6) years, result in owing more money than the car actually worth at some point in your loan. Evidently, it is no longer a practical consideration to take on long-term car loan.

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Seeking Professional Financial Help

When financial trouble is too much of a burden on your own, depression and negativity sets in. If you allow yourself to be a victim of your own financial problem, you lose!

It’s not too bad to seek for a professional help when you, and the people around you can no longer take the brunt out of your shoulders.

Choosing to use a professional financial planner depends on your particular circumstances. If you have the time and interest to conduct your own research – and a reasonable understanding of financial markets and products – you may choose to manage your finances on your own.

If you have more complicated financial affairs, or a particular significant financial decision, you may choose to work with a financial adviser to explain the options and present a selection of financial products that match your needs. Investment management and decisions involve many professional skills and considerations.

Choosing a financial adviser or financial planner

Approach a professional help from a licensed, qualified and experienced financial adviser/financial planner.

Make sure to check the following when you look for a financial adviser or planner:

> They must know your personal circumstances including investment objectives, investment horizon, knowledge and experience (including knowledge of derivatives), financial situation and risk tolerance (including risk of loss of capital), and carefully evaluate your risk profile before making any strategies or financial product recommendations to you.

> They should give proper explanations of why recommended products are suitable for you and the nature and extent of risks the investment product bears; should also document and provide you with a copy of the rationale underlying the investment recommendations made.

> In providing services involving derivative products, they must assure that you understand the nature and risks of recommended products and that you have sufficient net worth to be able to assume the risks and bear the potential losses of trading in the products.

> When selecting a financial adviser or planner, there are several basic questions you should ask to assess his/her suitability for planning your life goals.

  • What experience and qualification does the planner have?
  • What service does the planner offer?
  • What is the planner’s approach to financial planning?
  • Will the planner be the only person working with you?
  • In what way will the planner be remunerated and much does the planner typically charge?
  • Could the planner’s recommendation unduly benefit anyone else?
  • Has the planner ever been publicly disciplined for unlawful or unethical actions in his/her professional career?
  • Can our agreement be put in writing?

Even when you are relying on the financial advice from professionals, it is your responsibility to exercise vigilance and due diligence when choosing investment products.

To assist the financial adviser or planner to better understand your situation and recommend advice that best suits you, provide the adviser or planner with the correct and relevant information. Ask questions until you understand the rationale behind the advice. Don’t invest in products you don’t understand. Remember, think twice before committing.

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