How Are You Managing Money If Financial Distress is Overwhelming You?

By: Anamika Gupta

How Are You Managing Money If Financial Distress is Overwhelming You?

The stock market is down, foreclosures are up, unemployment is up and bankruptcies are up. Many Americans are having a very difficult time managing their money in this environment.Visit at http://themotley-fool.blogspot.com

There are many small business owners that are facing the prospect of losing their business. I faced this exact situation in the past year and this is how I dealt with it.

My home improvement business was very profitable by 2005 and I was looking at a very prosperous future for my family. In 2006, however, sales began to decline as more of my customers were finding it difficult to get home improvement loans to pay for my company's services. I realized that the future success of my business was in doubt and began to plan for alternatives.

I tried to sell my business, but there were no takers. I worked extremely hard to keep it profitable, but by June of 2007 I realized it was a losing battle. I looked at all of my debt, and understood that a bankruptcy was probably inevitable.

I knew that filing for bankruptcy was an extreme measure, and that the consequences of that decision would be far reaching, but I had poured every cent that I had into my business, including a huge mortgage on my house. I could not see spending the next 30 years trying to pay back all of that money when my formerly prosperous business was a victim of a bad economy.

I knew that before I took a step as drastic as bankruptcy, I had to have a plan for how I would provide for my family after I got rid of the business that had become an anchor around my neck. I spent hundreds of hours studying various online and home businesses and eventually found one that I thought I could do.

I started that business in December 2007 and was able to make over $10,000 the first week in January. This gave me the confidence that I needed to move forward, but it still was not easy. I was not able to consistently make that much every week, so I had to take some very drastic actions to keep food on the table.

My advice in managing money if financial distress is overwhelming you is born from my own experience. I was a victim of many creditors that threatened me and got me to cough up money that I could not afford to pay. Many times I found myself without enough money to pay for the basic essentials for my family. Health coverage was an almost instant victim of my financial struggle and food and gas costs became a great concern.

If you are going through a situation that is this difficult, I recommend making sure that you are able to take care of the basics before you succumb to the threats of your creditors. Having health coverage and food on the table is far more important than your credit score. There are far worse things than realizing that you need to pay cash for everything.

If there is any way that you can avoid a foreclosure or bankruptcy, by all means do so. You can drive a cheaper car and cut costs across the board to try to avoid losing your house or going bankrupt. If you realize that a bankruptcy is inevitable, then make the decision and protect yourself. Do not cough up money when you do not have it and begin working on a plan on how you can prosper in the future. This is perhaps the very best time to go through a bankruptcy or foreclosure because there are many people doing so. The social stigma associated with those financial events is not what it was 20 years ago and you will be in good company. Some notable people that have gone through bankruptcies are Abraham Lincoln, P.T. Barnum, John Barrymore, Kim Basinger, Bjorn Borg, Francis Ford Coppola, Walt Disney, Charles Goodyear, Ulysses S. Grant (his face is on the $50 dollar bill), myself and many others. Do not be afraid of taking the opportunity for a fresh start.

This may also be a very good time for you to start a home business. Your financial distress should help provide motivation for you to put in the effort to make a home business succeed. Most home businesses fail for lack of effort. The reason that mine succeeded is that I knew I had to be successful. Failure was not an option because the security of my family depended on that success.

If you are in financial distress you should also make sure to nurture the relationships that are important to you. Money, or the lack of it, can bring out the worst in people and you do not want to let your relationships to be a victim of your hard financial times. Any type of difficulty can either bring people together or drive them apart. The former is better than the latter and you will be able to handle your financial trials better with the support of family and friends than without them.

If you decide to start a home business, make sure that you have the financial ability or time to properly market it. Do not spend more money than you should to get your home business off the ground, but you do need to realize that it takes an investment to make money. If you invest your time to learn how to market for free, you will save your dollars for essentials and be way ahead in the long run.

I had very little money to put into a home business when I started, but I was able to take my effort and determination and build a very successful and profitable business. You may be able to do the same if you are willing to invest the time and take the risk to do so.Visit at http://themotley-fool.blogspot.com

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