5 Money Moves To Recover From Financial Trouble Fast
Sometimes when you think you've hit rock bottom, you forget that rock bottom has a basement. No one likes to realize they are just one missed paycheck away from exploring how to become a social media influencer, and yet so many people are struggling with having too much month left at the end of their money.
If you have found yourself deeper under the rocks than you'd like to go, it's time to grab a shovel to dig yourself out. Whether your financial problems are due to overspending, too much debt or something else, you need to stop the hole from getting any bigger.
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Here are five ways to magically fix your finances and bounce back after hitting rock bottom.
1. Don't Be Passive-Aggressive About Income Streams
The number one way to abracadabra your finances after hitting rock bottom is to simply earn more money. Cutting expenses will only do so much when you are in a deep financial hole. You also need to figure out a way to boost your income, including creating some passive income streams.
Luckily, there are numerous side gigs and part-time jobs that let you earn decent money outside of your full-time job. Use the extra money to pay down debt, build savings and get current on all of your bills.
2. Remember That 'You Only Live Once' Isn't a Reason To Spend More
You may only live once, but so does your credit line. Start by prioritizing setting aside some money for savings every month or pay period.
Even if it's a small amount like 5% of your budget, developing the savings habit and earning interest every month will improve your finances and your mindset. Try opening a high-yield savings account to get the best return on your money and build an emergency fund.
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3. Stick to a Budget -- It's Simpler When You Have No Money
If you want to tell your money where to go instead of wondering where it went, then creating (and sticking to) a budget is your next clutch money move.
For example, you can try following the 50/30/20 rule, which means allocating 50% of your budget to essentials such as housing and groceries, 30% to non-essential "wants" like dining out or gym memberships, and 20% to savings. However, if you are in a big financial hole, you might need to tweak the 30% part until you dig your way out of it.
4. Take Advantage of the Best Government Money Can Buy
Between inflation and a rising cost of living, you may be wondering whether or not you can claim the government as a dependent on your taxes this year. You can't, but do see if you can cash in on government assistance programs. They can serve as a stopgap measure to help get you back on your feet until you return to a position of financial strength.
Federal, state and local programs are available to help you pay for groceries, rent, utility bills, medical care, childcare and other expenses. Now that the government is technically back up and running, you can visit Benefits.gov to find out what kinds of programs are available.
5. Pay Off Debt To Get Back to Just Being Broke
Being broke may not sound like a great financial goal, but it sure beats being in a debt cycle where you pay more in high interest than you do what you actually owe. Begin by figuring out how much debt you have, who your creditors are, how much interest you are paying, and which debts you are behind on.
If you have the financial wherewithal to pay the debts on your own, one strategy is to pay the high-interest debts first and then work your way to the lower-interest debts. Or you could pull an Uno Reverse and try the snowball method, which is where you pay off your debts in order from the smallest balance to the largest, regardless of the interest rates.
Vance Cariaga contributed to the reporting for this article.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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