Relationships and The Credit Crunch
By admin on Oct 2, 2008 in Relationship Success Secrets
Everywhere you turn the words ‘credit crunch’ and ‘recession’ are being used.
I was speaking with a colleague recently who was looking and sounding quite stressed. It turned out that his business was tied in to XL, the big tour operator that had just gone bust. And just a few days ago a friend of mine, was commenting on how he was noticing, in the credit crunch climate that his client numbers were steadily dropping and he was wondering what he could do.
The message in the newspapers and on the television is clear – we are entering some very difficult times and it is predicted by some, that these hard times could possibly last for the next couple of years.
We are hearing, almost on a daily basis of people having to sell their homes at a loss and the statistics on the numbers of homes that are being repossessed is at an all time high.
And it’s not just businesses that are affected by difficult economic climate. Romance too can suffer when the finances aren’t in a favorable place. I discovered this recently when I met a nice guy who told me, that he would love to take me out but that due to tough financial times, he wasn’t in a place to date right now.
Relationship counsellors tell us that financial difficulties contribute to huge tensions and arguments in relationships. In one survey, two out of five couples whose relationships broke down cited debt as a contributing factor.
Friendships can suffer too when times get tough.
If you feel like your friends are doing well but you can’t afford to hang out with them, you may feel bitter that they are cushioned from the leaner times you’re experiencing yourself. You might end up trying to pretend you can maintain your previous lifestyle, perceiving peer pressure from your friends which can also lead to you feeling deep resentment towards them.
Yes, times are tougher for many of us. So let me share my own top tips for beating the credit crunch.
Beating The Credit Crunch!
Tip 1: Try To See the Opportunity in the Crisis
I was talking to my mother the other day on Skype (I do love it!) and she was telling me that she was reading an article that said that the Chinese word for “Crisis” was actually made up of two words: danger and opportunity. A time of crisis can also be a time of opportunity. I know people that did very well in the last recession. It often meant moving out of their comfort zones, thinking outside of the box and making some potentially scary decisions.
- How you choose to view the current financial will have a huge impact on how you deal with it. If you knew there was an opportunity waiting for you, what difference would that make for you? What would be your next move?
Tip 2: Do Something Different
Einstein’s definition of insanity is “doing the same thing and expecting a different outcome.” Think about what finance strategy you have used until now, and think about what you could be doing differently. Talk to people who are good at managing their finances.
Read books, trawl the internet, study the lives of successful people and find as many ideas as you can on financial management strategies – just remember if what you’ve been doing hasn’t been working – do something different!
Tip 3: Look forward, Not backwards
At times like this it’s easy to look back and focus on what you got wrong, on the mistakes you made and on some of the poor choices you might have made. We all have 20/20 vision with hindsight! If you don’t want to continue to take the past with you in your future, quit dragging it along with you. Take the learning from your past, then let go. Focus on moving forward – stop focusing on what you haven’t done and start focusing on what you do want to do.
Tip 4: Have A Plan
Worrying about a situation is simply hallucinating about something that will likely never happen. It's much more productive to stay calm and think up a plan to help your situation. If you are sinking in credit card debt, here's an example of a plan that could help you.
- Put your cards on a direct debit
This saves the angst each month of sitting down to write the cheques or go online to make payments. This is also a good strategy for those who procrastinate and in doing so, end up with late payment fees.
- Make a spreadsheet of all credit cards
You need to know how much you owe, what APR you are paying, what your minimum monthly payments are. A simple spreadsheet will suffice. If you don’t know how to use a spreadsheet now is the time. This may feel awful – it did for me, but trust me, it’s the first step to facing the problem and starting to take control and the sheer relief at the end of the exercise makes the pain worthwhile!
For free Excel tutorials go to http://www.
- Decide on which credit card you will pay off first
Pay off the one with the highest interest rate, largest balance or the smallest amount. This means you pay off as much as you can each month while continuing to pay the minimum payment on your other cards
Financially, it makes most sense to pay off the card with the highest interest rate but some people may choose the credit card with the smallest debt on it because it helps their motivation to see a card at a time get paid off. And if you're motivated, you'll carry on doing it.
Once one card is paid off – take the monthly amount you were paying into that one and add that same amount to the payment
You already have gotten used to not having this money to spend so each month whack that entire payment onto the minimum payment you were making on the next worst credit card.
And when that one is paid off, take that entire monthly payment and add it to the next one… and so on.
In conjunction with the first part of your plan, while you are paying off your credit cards:
- Financially educate yourself – read; there are lots of great books out there. Go to lots of free seminars – leave your cards at home and don’t buy anything. Learn, learn,learn! My credit crunch hit a few years ago after a relationship fell apart – times were really tough, but it was also the start of a wealth creation journey for me!
- Don’t incur more bad debt – know the difference between bad debt and good debt: Read Robert Kiyosaki's Rich Dad Poor Dad for a great explanation
- Have a compelling reason to get the debts paid off – what will you do when your debt is paid off? Have a dream, know where you are headed. Write it down, create a vision board with pictures of your dream.
- Hang around people who can support you, encourage you and help motivate you
In a forthcoming article, you will discover The Latte Factor and how you can save money, even while paying off debt!
