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6 Damage Limitation Strategies To Manage Financial Mistakes
Everyone feels that they are clever enough not to make financial mistakes that can put their own lifestyle at risk.
Even for those who knowingly take on huge risks, they often feel that they can weather the storm should things really go south.
Well, as you can see from the many bankruptcies filed each day, bad financial management can occur to anyone. And the hardship that comes with these mistakes can have a toll on family members as well.
Nobody volunteers to be financially wiped out.
But should you run into extreme financial challenges due to mistakes you have made, don’t throw in the towel as if you are expected to do so.
Here are some strategies that might just dig you out of the hole you found yourself in.
1) Don’t panic
You are most prone to compounding your problems when logic and composure is thrown out of the window.
And you will be vulnerable in doing just that when you panic. Freaking out at this point will not do anyone any good.
When you have to make another financial decision, take time to settle down and think it through. Shouting at your banker will only make him loathe you.
Take an hour or 2 to settle down and make decisions based on logic.
2) Trust in what you are doing
There’s no point stuffing yourself with regret.
Your family and your lifestyle might hinge on how you respond rather than what you did.
You might have made a mistake, but you might also have the solution to alleviate all those problems your mistake has caused.
If you stop believing in yourself just from guilt and regret from the initial mistake, you might not have the confidence to follow through on your solution even though it would resolve everything.
3) Undo your mistakes
It’s not always impossible to undo what you did. In fact, it is very possible if what you did had something to do with overspending.
Retailers very often have refund policies with 60 to 90 days of refund periods. This means you could still get a refund even though you have already settled the bill on your credit cards.
It’s amazing isn’t it?
When it comes to real estate don’t forget to include contingency terms so that you have a back door to sneak out of a bad deal.
Have you been scammed online?
There are many avenues that can help you get justice. If you have used a payment processor like Paypal, they have their own policies on refunds. Just lodge a dispute and let them investigate it.
Should they fail to rule in your favor and return you the money, you can still file a credit card chargeback with your credit card issuer.
Usually these corporations are sympathetic with consumers being scammed. Their reputation is at risk as well. So you can bet that they will do what they can to help you.
4) Keep your long term goals in mind
You can expect many bumps on the road towards your ultimate goal. Treat this as just another one of them.
Life is never a walk in the park unless you won the genetic lottery and born into wealth.
Learn from your mistakes and move on. Make it a point not to repeat the same mistakes in future.
The important thing is to emerge stronger and better than ever before.
5) Be careful of the depression trap
You could be tempted to make things worst by getting into more debt.
You might feel that since you are already at the bottom, you might as well scoop up everything down there. You can then tell your wife that depression is to blame.
Be wary of such temptations.
It could turn an easy problem to solve into one that cannot be solved. And you will only have yourself to blame when it all comes tumbling down.
Common sense will tell you that compulsive gamblers get into deep trouble by gambling their way out of a gambling problem. It almost always make the problems bigger.
6) Cut your losses
The best example you can find about people getting into deeper trouble for not cutting their losses come from the world of money markets.
Very often, investors who get emotional with what they hold, buy more stock when prices fall because they have already bought a stake at a high price.
This is even when all market signals show an impending downward correction. They feel that they are averaging out the total costs of their holdings and will emerge richer.
What often happens is the contrary.
Should you be scammed by a bonafide con-artist, will you give him more money when he promises to return you the original sum if you do it?
Of course, stock market is not exactly the same. But it is not that much different as well.
Financial setbacks can be a shocking experience when you have never encountered a significant one before. But remember that failures are just lessons you take on your way to the promise land.
As long as you don’t get disheartened and carry on driving towards your goals, you are still on the right track.
But if you get off the road just because you ran into a speed bump, you are not going to get to the destination you have set for yourself.