When your financial circumstances change for the worse it can be very stressful. You might lose your job which is bad enough, but then you have to get another one with a lower salary just to keep the cash coming in. Here are some tips to help you manage your money when you suffer a drop in income.
Create a budget: Find your baseline; the absolute minimum you need to live on. Include shelter, utilities, food and any debt repayments you have. Now compare that with your current income. You may have to make some cutbacks to cover the minimum, but it will make it easier one you have a clear idea of where you stand.
Make cutbacks: Be realistic but also be prepared to cut back anything that is not absolutely essential. Food is obviously a necessity, but having 400 cable channels is not. Keep your Internet because it’s handy for looking at job sites and you may even decide to use it for working from home.
Contact your creditors: Be sure to contact your creditors before they contact you, and let them know about your current situation. If your creditor is local you should make an appointment to meet with him or her in person. You will most likely need to speak with an accounts manager or a loss mitigation specialist. If you have a mortgage contact your bank and discuss what options are open to you. They may allow you to just pay your interest until you are working again.
Don’t take on more debt: The worst thing you can do at a time like this is to take on more debt. Avoid the temptation to use your credit cards or take out a home equity loan or even borrow money from friends or family. Getting into more debt will only create bigger problems in the long-term.
Think of ways to boost your income: What additional things can you do to bring in more money? For example, you may have a spare room that you can rent out, or perhaps you have older children living at home who could help out with living expenses.
Seek professional help: If you’re feeling overwhelmed by the stress of your salary setback and you’re having trouble coping with the changes, you may need to consider talking to a debt advisor. Debt counselors can help you come up with a workable budget and sometimes can negotiate with creditors on your behalf. Check out this site to find out how to settle your debts.
Dealing with a drop in salary is always stressful and challenging, but if you keep these strategies in mind, you will be able to meet the challenge head on and you will find the strength and the wherewithal to make it through this difficult time. Keep a clear mind and a strong spirit and you will be able to move ahead.