5 Big Financial Steps to Dig Your Family Out of a Financial Hole

Worrying about money is something we all do, and the bigger your cash flow concerns, the more helpless and overwhelmed you can feel.

If you’re in financial dire straits, you can only solve them by taking action, and there are typically a few steps involved in returning to a state of relative stability. Here are just a few of them to get your journey started on the right foot.

5 Big Financial Steps to Dig Your Family Out of a Financial Hole 1

Put Together a Household Budget

You won’t be able to climb out of a financial hole if you don’t know the size of the challenge ahead of you. The only way to do this is by checking your household income, comparing this to your outgoings, and using this contrast to calculate exactly how much you’ve got to work with.

Budgeting is a skill that’s worth developing, as it gives you the means of seeing where you stand, and the opportunity to make changes to your finances that will lead to improvements over time.

Take Out a Home Equity Loan (e.g. HELOC)

If you’re faced with a financial emergency that you can’t afford to cover the cost of, but you happen to own your home, a loan secured against the property can be a welcome solution.

There are different types of home equity loan available, including a HELOC, or home equity line of credit. A HELOC is more flexible than a traditional loan in that you can borrow significant sums at low rates, and have the option to take out as much or as little as you need on the fly.

Even if you don’t need money in a hurry, a HELOC is handy for financing whatever major purchase you want to make, including remodeling and renovations.

Pay Off Credit Cards

Using credit cards is fine so long as you actually pay off what you owe. In fact, this is one way to build a good credit history. But if you’re not a master of money management, having a credit card is a risky business that could backfire.

If you’ve accumulated a lot of credit card debt, paying it down should be a priority. If there’s not enough wiggle room in your household budget to do this, you might consider using debt consolidation to escape from the often sky-high rates of interest which apply to credit cards in most cases.

Cut Out Unnecessary Expenses

One common cause for financial distress is living beyond your means, and your budget will tell you whether or not you’re guilty of doing this month by month.

The harsh reality is that you won’t be able to dig your family out of a financial hole without making some sacrifices. That means finding expenses which aren’t strictly necessary, and cutting them out altogether.

A gym membership or any kind of ongoing subscription to a service that’s a luxury rather than a necessity is a good example of something you can eliminate without suffering a significant decline to your quality of life. There are always other ways to stay in shape without splashing out, for instance.

Change the Way You Shop

Lastly, while you still need to buy essentials to fill your kitchen cupboards and keep your family fed and watered, that doesn’t mean you have to stick to all the premium brands across the board.

Switching from a mid-tier grocery store to a budget-friendly alternative might seem like a disheartening step to take, but as with all of the points we’ve covered, you need to remember that this is only a temporary measure.

Suffering small indignities in the short term is better than being in a financial hole for good, so stick to your guns and start saving.

Julie
Author
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