Three Options for a Financial Fresh Start

If you need a financial fresh start, you might have to take steps you wouldn't normally take. It's not pretty, but it may be necessary.

Even if you've always been financially responsible with your money, you might hit a rough patch. Unfortunately, there's no such thing as true job security. For that matter, every week countless people receive pink slips from their employers. After a job loss, you might receive a severance package from your company and qualify for unemployment compensation; but sometimes, this income is not enough to keep your head above water. And if it takes a while to find a new job, your personal finances can get off track.

This isn?t the best situation to be in, however, there are ways to make a fresh start after a financial hardship. The truth is, many responsible people have successfully come back from a financial crisis ? and you can do the same.

1. Downsize Every Aspect of Your Life

Downsizing your house or car might be the last thing you want to do. But if you can reduce your monthly expenditures, it'll be easier to survive any financial crisis that comes your way.

What does this involve?

You might have to sell your home and rent a smaller apartment or house. This can significantly reduce your monthly payments, at which time you can use the savings to pay off debt or cover other living expenses. And as a renter, you're not responsible for the home repairs and maintenance, which also saves money in the long run.

However, downsizing doesn't just apply to your house ? it also applies to your automobile and your lifestyle. Getting a cheaper car and modifying your lifestyle can free up cash in your budget. For example, you might prepare your own food at home to save money, skip your annual vacation or look for free ways to have fun with friends and family.

2. File Bankruptcy

Although a bankruptcy can remain on your credit report for up to 10 years, this legal proceeding can be the first step to getting your personal finances back on track and enjoying a fresh start. If your debts are too much to handle, and if creditors call your home constantly, filing a chapter 13 might be the only viable solution.

Speak with a chapter 13 bankruptcy attorney to learn all options available to you. With this type of bankruptcy, you can keep your property, and then repay all or a percentage of your debts over a three or five-year period. This process not only gets creditors off your back, it can provide peace of mind and the opportunity to move forward.

3. Liquidate Your Belongings

If you're struggling to stay current on your monthly bills after a financial crisis, liquidating your personal belongings can also provide a financial fresh start. Of course, selling your belongings may only offer temporary relief. However, cash from the sale of your items can provide financial support until you secure new employment, or supplement any income you receive from unemployment.

Go through your closets, attic, basement, and garage or storage unit and clean out items that you don't need. You can plan a yard sale, list these items on eBay, take them to a consignment shop, or use another online marketplace.

Possible items to sell include electronics, furniture, old clothes, accessories, or any other item that takes up space in your home.

If you stumble upon hard times, don't beat yourself up. Financial issues can affect the most financially savvy people ? it's simply the times we live in. But if you keep your head up and look for doable solutions, you can reverse the situation and regain control of your finances.

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