Grasp The Feelings Of Your Financial Situation And Tackle Them
Stop overthinking your financial situation and put that time towards creating a solid plan of action.
Have you ever told yourself that your financial situation was hopeless?
You’re not alone as many Canadians are stuck wondering how they can improve their monthly income to pay for everyday bills and needs.
One thing that is for sure is that giving up on your financial situation will do you more harm than good.
Given the current pandemic situation, it’s a tough time for everyone who has been laid off, working from home, working reduced hours or lost their job completely.
Even those working the front-lines from medical staff, mechanics to grocery clerks are feeling the stress working over-time hours in a stressful situation.
Any of the above scenarios should be cause for concern when it comes to your financial situation.
Finance is For Life
Whether you’re too tired to focus on finances, don’t care about them or are overthinking the situation something needs to be done.
The last thing anyone expected was something like this to happen with little to no savings in the bank.
Flying by the seat of a chequing account or living pay to pay is tough given the prices of everyday living paired with debt to income ratio.
Although the government stepped in with the Canadian Emergency Response Benefit (CERB) for many Canadians that money hasn’t come fast enough.
Uncertainty About Tomorrow’s Financial Situation
If you’ve started the pandemic in a financial situation that was already suffering you’re likely at the brink of uncertainty.
- How will I pay my bills?
- What should I say to my creditors?
- Will my landlord understand that I can’t pay all of my rent?
- What will I do if I don’t receive emergency benefits on time?
- Should I reach out for help and who should I talk to?
- Do I look for a new job while I’m laid off or wait it out?
I’m financially depressed and feel lost is the vibe I’ve been getting reading comments on numerous news articles on Facebook.
It’s no surprise given the amount of consumer debt vs. emergency savings not to mention lack of financial discipline.
That might be a tough pill to swallow but I was once in that category as was Mrs. CBB where we felt the pressure of the downward spiral.
Applying for social assistance was the hardest financial step Mrs. CBB has taken in her life since she had always worked.
Overall, it had motivated her to learn about basic finance and how to apply it to her daily life.
She wasn’t as tuned in as she is today but she made sure to have an emergency savings of $3500 at all times.
For myself, I was left with little money in University to pay my bills and had to work full-time while I was in school.
I couldn’t ask my parents for money as they were struggling to keep their business going even though it was thriving.
The thing is just because someone looks like they are doing well doesn’t mean that their financial situation is on par.
It’s quite the opposite sometimes and feeling that pressure to live up to an unaffordable lifestyle is misleading.
Financial Situation Wake-Up Call
In all honesty, I hope that what is happening in the world right now is a big wake-up call for everyone.
Not only the people who are financially secure but those people who ignore basic finance have little to no emergency savings, close to retirement and even the investment savvy Canadians.
It doesn’t matter what you have or how much of it you have when you’re invested in something it can come crashing down fast.
We’ve seen our net worth drop $100,000 in two months and surely the price of our home has also tumbled.
This is precisely why we have left the estimate of our home the same in our net worth at $345,500 for many years.
Similar houses in our area have sold for close to $700,000 which sounds great on paper but not necessarily a reality.
With the potential pause in the real estate market and social distancing now probably isn’t the best time to be buying and selling a house.
Even so, real estate agents are still moving forward and using virtual tours to sell the house as they were urged to stop face to face business.
Personally, I’d rent until I was able to walk into a house I was looking to buy.
Retirement Ready Can Change Quickly
For those of you ready to retire or close to it losing a chunk of your retirement savings may put you in a tough financial situation.
Not necessarily because you won’t have enough money to live until you are 100 but because it’s money you had and now it’s gone.
The hardest part about finance is watching your money or assets decrease in value.
In.The. Blink. Of. An.Eye.
Perhaps the home you live in was going to be your retirement nest egg but it’s lost some of its value amid the current financial crisis.
I recall blogging about how we paid our house off in 5 years and some respondents asked why we would do such a thing.
This is why…
- Global pandemic and financial crisis
- Job loss, union strike, laid off
- Stock Market drop
- Health-related issues
- Financial security
Reviewing Investment Portfolio
There’s no better place right now for us than to be 100% debt free and young-ish even though we mourn the market drop of our investments.
After setting up a virtual meeting with our financial advisor to understand our position and the possibility of capitalizing on low priced stocks we are sticking with optimism.
We lived through the market crash in 2008-2009 and now 2020 and still have many years to recover the money we’ve lost.
For those of you not so lucky, it’s probably the worst-case scenario for you and now we’re thinking ahead as well.
- What if we get to retirement age and this happens again?
- Will we have enough money to live the retirement dream that we want?
- Can we still afford long-term-care that is above the basic government level?
There’s certainly lots to consider and since we are both at home we’re discussing our options and perhaps a plan of action.
This pandemic is probably the worst financial situation for consumers and the economy and hopefully, we will never have to live through it again.
Our children may not be as lucky so financial literacy is imperative at all ages and stages of life.
My Financial Situation Is Not Good
If you find that you’re sitting at home and stressing out about your financial situation use this time wisely.
Hopefully, once your CERB or Employment Insurance comes in this will give you a glimmer of hope.
But you’re not done yet.
Being on the tip of the iceberg financially is NOT a place you want to be stuck in ever again.
Set time aside to ask yourself a few basic financial questions.
- Do I use a budget? Why or Why Not?
- How much money do I “Net” each month?
- Can I earn extra money on the side? If yes, how?
- Am I saving any money for emergencies? Why not?
- How can I better plan my financial situation?
- Where do I begin researching personal finance online?
- Do I have a Will or need a Will?
- What will happen if I become Injured and no longer able to work? Back-up plan?
- Am I investing money in my retirement savings account or tax-free savings account?
- Will my children be taken care of if I’m gone?
- Do I have life insurance? Why or why not?
- Am I paying for tenants’ insurance? Why not?
There are many financial situations and each one is unique and personal which is why it’s important to narrow down your needs.
Any situation that will break you financially must be considered no matter how much money you earn every year.
Good Financial Situation vs. Difficult Financial Situation
There’s never been a time where I’ve thought someone has over-done their finances, including myself.
In fact, I think anyone who is in either a good financial situation or a difficult financial situation should be as detailed as possible.
When we started on our journey to debt freedom we started with a budget and are now building spreadsheets, budget binder printable tracking sheets and lots of financial charts.
Related: Find all of the above Free Money Tools and Resources
Some of you might think that’s too much effort to put in especially since we don’t have any debt.
But wait, here’s the thing…
No matter if you are in a good financial situation or not your kingdom can come crashing down at any time.
As fast as the sun can shine a tornado can come funneling in and rip everything apart.
However, there’s nothing wrong with going over the top with your financial goals if it makes you sleep better at night.
When you are faced with a difficult financial situation having numbers, charts and a budget available for tweaking will get you ahead.
Getting Out Of A Difficult Financial Situation
Personally, I believe the best way out of a difficult financial situation is to understand everything you can about it before it happens.
By this I mean;
- Where will we take money from in the event of a financial emergency?
- How much money do we earn each month?
- Are we spending too much money on x?
- Is it possible to earn more money?
- How are our investments performing? Talk to your advisor.
- Do we have a plan b in the event something should happen?
Those are just some random questions that popped into my head but plenty more linger.
Be Realistic With Your Financial Outlook
Ideally, what I would do is sit down with a piece of paper and a pencil and write down what’s important to me.
Also, just because someone looks like they are in a good financial situation doesn’t necessarily mean they are in one.
You can earn a high salary but be deep in debt or you could earn minimum wage and be debt-free and happy.
The direction you choose to go is yours and trust me when I say debt-free with a plan is far better than financial stress.
Take this time now to review your financial situation and write down as many questions as you can think of.
Figure out what information you need to know every month that will help calm your nerves with money.
Don’t be shy to detail your situation as heavily as you’d like and break it down into categories to suit your needs.
Treat Your Financial Situation Like It’s A Baby
Whatever your financial situation is you must take care of it like it’s a brand new baby.
Consider your financial situation as a child for life that you will always care for through the ups and downs.
That’s really what finance is all about and even for those of us who think we are prepared like ourselves losing $100,000 is still hard to swallow.
Stop overthinking your financial situation and add a bit of optimism back into your life by doing all the right things to get you to a happy place.
Until then, be well everyone.
Discussion: What are you doing right now to help improve and understand your financial situation better?
Leave me your comments below as I’d like to hear what you are all going through during this time of uncertainty.
Net Worth Losses and Gains
What happened to our money in March?
The obvious is happening here and there’s not much we can do about it apart from wait to see what happens.
Understanding Net Worth
What Does Individual Net Worth Mean?
Net Worth is a snapshot of your financial health sort of like a picture or debt to net assets.
In simple terms, it’s a total of the value of your assets minus your liabilities.
We credit the growth of our net worth due to patience, perseverance, using a monthly budget and not giving up.
Your numbers may go up and down but don’t let the numbers scare you rather understand why and move on.
If you would like to use our budget I offer a FREE downloadable budget which I created and that you can use at home just like we do.
I don’t charge for it because I want you to save money not spend more!
There are tonnes of other free resources at Canadian Budget Binder to help you build your net worth.
Calculate Your Net Worth
Do you know how to calculate your own Net Worth?
We like to calculate our net worth every month so we know if we are still on track.
Some people calculate it yearly or quarterly but it’s up to you and how informed you want to stay.
Net Worth is only an estimate and not everyone uses the same type of figures to tally it up.
Some of you may not include vehicles like we do or leave out assets inside the home as we have.
You might be that person that believes that your house should be excluded.
It depends on what you want to calculate or what you can sell today and make money on for tomorrow.
Figuring out net worth is fairly easy as long as you know your numbers or monthly finances which means you need to do your homework.
Net Worth is simply adding up all your assets (what you own) then taking away your liabilities (what you owe) which will give you a net worth number.
Understanding your net worth will help you determine if you are on track meeting or beating your personal financial goals.
It doesn’t get any easier than that.
Determining Net Worth
Net Worth = Assets – Liabilities
Why not go ahead and calculate your own using our Free Money saving Tool Net worth Calculator (Canadian Budget Binder 2012)
When budgeting anything is possible, we are proof of that although we still have a long way to go in our journey.
These are our numbers and our goals, not a means of comparison towards your own goals to others’ target goals.
We don’t care how much money others make or if they have a high net worth or if it is lower than ours as it’s not a competition.
I hope our experiences will help guide you along your financial path working towards debt freedom.
Not everyone has the same path in life.
Some of you may have had to start over like I did or go to school a second time and now have OSAP loans to pay back.
Others may have divorced, lost money in the stock market or other investments, suffered job loss, fell ill or injured on the job and so on but you can’t let that stop you from achieving your financial goals.
Some of you may have been given trust funds, paid-for homes, paid educations or perks in life that give you a financial kick-start and that’s OK too.
Earn It, Save It, Invest It, Build It
Remember what I said, “It’s not about how much money you make, it’s how you save it”.
The only reason people accumulate wealth is that they know how to save or invest it wisely even if they did inherit money or win the lottery.
The smallest improvements should mean big strides in working towards reaching your goals.
Sometimes we have to fail to learn and we’ve all been there.
Money can be an evil force for some people especially those who have a negative attitude towards their financial situation.
I urge you to be optimistic and little by little with determination you too should see improvements if you want that to happen.
Canadian Budget Binder Net Worth Updates 2020
Click the links below to read our net worth updates for the year.
That’s all for this month’s net worth update but please check in the middle of May 2020 to see how we made out in April 2020 with our financial portfolio.