HITTING A WALL: WHAT TO DO IF YOUR FINANCIAL PLAN IS BROKEN?
Last week I talked about my adventures in marathon training, and learning to love.. and live the mantra, "My Race, My Pace". It is a mantra that I teach my children, and carries over to any segment of our lives. Today, I want to talk about a time I've failed. There is an inherent fear of failure for most of us, and along my personal journey I have learned to embrace the failures as much as celebrating the wins. These valuable learning lessons play a huge role in personal growth and development as humans, because life loves to throw out curve balls that we can't seem to plan ahead for.
While running the Dallas Marathon, I hit a wall. I had followed my race plan to a T and was feeling as amazing as one can feel while running a 26.2 mile race. That is.. until mile 19 happened. The mile long monster hill that begins at mile 19 is a challenge even for the most seasoned athlete, and the race often has an unofficial challenge for the fastest person up the hill. I remember standing in the middle of the road after only making my way up one third of the hill wondering how I was going to continue. My entire body hurt, and my ego even more so since people were passing me left and right. I knew I couldn't quit, but I also knew I didn't have the energy to keep going at the pace I had been running steadily. Another runner came up beside me and stopped for a second to take a break. We lamented about the seemingly impossible incline, and then regrouped and revised our strategy in overcoming our temporary problem. I failed to meet a short term goal I had put in my plan. But... this failure was only a temporary setback and I continued on to finish the race!
We’ve all been there—running our personal financial marathon when suddenly, we hit a wall. Everything was going smoothly until unexpected expenses, a job loss, or market changes threw a wrench into our well-laid plans. Just like in a marathon, hitting a financial wall can feel overwhelming and disheartening. But don’t worry! Here’s how to navigate these rough patches, recalibrate your plan, and get back on track to financial success.
Understanding the Financial Wall
In marathon running, hitting the wall refers to the point where your energy levels plummet, and every step feels like a Herculean effort. Financially, hitting the wall might mean your budget is blown, savings are depleted, or debt is piling up. It’s crucial to recognize that hitting a wall doesn’t mean failure—it’s an opportunity to reassess and adjust your strategy.
Recognizing the Signs of a Broken Financial Plan
Budget Overruns
Depleting Savings
Consistently spending more than planned can signal that your budget needs reevaluation.
Rising Debt
If your emergency fund is running low or your savings goals are stalled, it’s time to take a closer look at your financial habits.
Financial Stress
Increasing credit card balances or loan amounts indicate that your income isn’t keeping pace with your expenses.
Persistent worry about money, trouble sleeping, or feeling overwhelmed by financial decisions are clear signs that something needs to change.
Steps to Recalibrate Your Financial Plan
Pause and Reflect
Take a moment to assess the situation without panic. What caused the disruption? Identifying the root cause is the first step to finding a solution.
Revisit Your Goals
Are your financial goals still realistic and aligned with your current situation? Adjusting your goals can provide a clearer path forward.
Revise Your Budget
Analyze your income and expenses. Look for areas where you can cut back or make adjustments. Small changes can make a big difference.
Rebuild Your Emergency Fund
Prioritize replenishing your emergency savings. Even small, regular contributions can help you rebuild a safety net. Tackle Debt Strategically
Create a plan to manage and reduce debt. Consider the debt avalanche or debt snowball method to systematically pay off what you owe.
Practical Tips for Overcoming Financial Hurdles
Prioritize Essentials
Focus on covering basic needs first—housing, food, utilities, and transportation. Everything else can be scaled back temporarily.
Increase Your Income
Look for opportunities to boost your income. This could be through a side hustle, freelancing, or asking for a raise at work.
Seek Professional Advice
Financial advisors can offer valuable insights and strategies tailored to your situation. Sometimes an outside perspective is just what you need.
Stay Positive and Persistent
Maintaining a positive mindset is crucial. Remember, setbacks are temporary. Persistence and resilience will see you through.
Learning from the Experience
Every runner who hits the wall learns something new about their endurance and limits. Similarly, financial setbacks offer valuable lessons. Reflect on what went wrong and what changes you can implement to avoid similar issues in the future. Use this experience to build a stronger, more flexible financial plan.
Conclusion
Hitting a financial wall can be challenging, but it’s not the end of your journey. By pausing to reflect, revisiting your goals, and adjusting your plan, you can overcome obstacles and continue moving towards financial success. Remember, every setback is an opportunity to learn and grow stronger. Keep your eyes on the finish line, and remember: it’s your race, your pace, and you have the resilience to succeed.
FAQs
- What should I do first if my financial plan is broken? Take a moment to assess the situation calmly. Identify the root cause of the disruption before making any adjustments.
- How can I revise my budget effectively? Analyze your income and expenses, prioritize essentials, and look for areas where you can cut back or make adjustments.
- What’s the best way to tackle rising debt? Consider using the debt avalanche or debt snowball method to systematically pay off your debts.
- How often should I review my financial plan? Regularly—at least once a year or whenever there’s a significant change in your financial situation.
- How can I stay positive when facing financial setbacks? Focus on the progress you’ve made, learn from the experience, and remember that setbacks are temporary. Persistence and a positive mindset are key.
Until next time...this is Melissa Making Cents!
Melissa Anne Cox CERTIFIED FINANCIAL PLANNER™ is also a College Planning and Student Loan Advisor in Dallas, Texas
