During the early years of starting my business, I moved to a rural community with one simple goal; to save enough money to relocate back to the city. To save up enough money, I help my income from my international partner for many months until it accumulates enough money to facilitate my relocation back to the city. It was like asking you, boss, to hold your salary for like 8 months so that you can collect a bigger paycheck afterward to fund a big project.
When my income had accumulated to some thousands of Euros, I requested the check. 3 months later, I received a shocking revelation; the check had been intercepted and cashed by fraudsters.
Every attempt to recover the money was futile. The reward for my months of hard work, sweat, and blood had vanished. My plan to relocate was crushed. I had to start all over again. I can’t think of the worst financial disaster I had experienced. I may have lost more than the sum of money I lost from that incident in later years, but this particular loss was a disaster.
You see, financial disasters happen almost every day. There are financial disasters due to black swan events like the lockdown due to COVID-19 pandemic, economic recessions, and natural disasters that send a large number of people several steps back financially. There are also events like an investment gone bad. It may even be a good decision that comes with a temporal setback like a business decision I made 7 years ago. I implemented a technology change that crashed my media company’s revenue by 90 percent for straight 18 months. However, it was a good decision that had short-term consequences but a long-term benefit. But it was a tough 18 months nonetheless.
For some people, it could even be a result of their spending habits, medical bills, or getting scammed of their hard-earned money. In other words, there are many incidents that lead to financial setbacks every day. Regardless of what led to your financial disaster, the question is how can you recover when you lose a substantial part of your finance or when you lose your source of income? That is the question we going to answer in this video. Before we get to it, I’ll like to invite you to subscribe to After School TV for more insightful videos like this.
Accept your situation
The first most important step for financial recovery is to stop wallowing in your misery and accept reality. Yes, it’s hard to lose your lives savings. Yes, you’re likely the victim of somebody else’s mischief. Yes, it’s devastating. But none of that matters now. And the longer you stay reliving your misfortune the longer it will take you to recover.
It may seem hard to accept the situation but it’s really not that hard. From the story I told you about my biggest financial disaster, I let myself feel as bad as I could for 24 hours and went back to work the next day. The way I look at it is that, if I had done everything I could do and there was nothing left to do to recover from my loss, the only option is to look for the next move. That was exactly what I did; work harder to regain more than I lost within a shorter time. Seriously, what other option is there?
The same energy you spend wallowing in regret and misery can be channeled towards recovery. You can’t afford to live in the past now. You have to accept the reality of where you are at this point; not because it is the right thing to do, but because it is the best thing you can do for yourself and for your good. The best defense is a good offense, so get out of defensive mode and get started on the road to recovery with a clear offensive strategy.
The second step to financial recovery is to take inventory of your current situation. Did you lose your job because of the pandemic? Did you lose your business? Were you in the middle of a delicate project? You have to identify what resources you have left, and what liabilities you face when developing your plan to come back from a financial disaster. Do you have debts to repay? How much? Do you have responsibilities lined up? What do you have at this point that you can start with? How much are your monthly expenses? You have to know where you are now before you can have a realistic plan to get where you want to go.
Define your goal
You must determine where you want to go financially starting from this point. After I lost my check, I set a goal to earn the money I lost at half the time it took me to earn it previously. Once you know where you are, and you know where you are going, it’s simply a matter of plotting the course to get there.
Develop your plan
When my business lost 90 percent of its revenue, to be able to continue paying salaries and other business expenses, I devised a plan and started a side eCommerce business. The side business was to supply the cash flow to keep the main business afloat while I worked on getting it back to self-sustaining. Your plan will bridge the gap between where you are and where you are going.
If you have debts to replay, don’t make the mistake of working towards paying off debt alone. Instead, follow the teaching in The richest man in Babylon. In the book, a man who had a lot of debt to pay had to reach an agreement with his creditors to repay a percentage of his income until he paid off his entire debt. That way he is able to continue taking care of his other present and future needs while paying down his debt. So your plan should balance your need as well as other third parties.
Take massive action
This step sounds obvious but for some reason, most people tend to forget its importance. A plan is nothing more than wishful thinking until it’s executed into action. A lot of people dream about improving their financial situation, but few take consistent action, and that makes the difference. The ability to consistently and persistently direct meaningful action toward achieving a goal is what separates successful people from the rest. This is not the time for a pity party. Pity is the last thing you need to recover from a financial disaster. What is need is demonstrated value through massive action.
Evaluate and adjust
As you take action, be certain that you will make mistakes. It is then up to you to learn from the experience to improve your skills and become more knowledgeable. That’s why you should never try to perfect your plan from the beginning. Almost never will your first plan be your best plan, so don’t waste the effort trying to have a perfect plan.
Starting fast is more important than starting perfect because you’ll have plenty of time to correct the course later rather than spending all that time on the proverbial drawing board. Instead, just get started with a reasonably intelligent approach and correct course as you learn and grow.
The one thing you must avoid
I have met people who have become totally risk-averse because of a previous bad experience that led to a financial disaster. These people default to bystanders and never want to be involved with any financial endeavor with some semblance of risk. At all cost, resist the urge to withdraw into cynicism and apathy due to your past experience.
Try to isolate yourself from the situation to see it clearer from an observer’s perspective. You may observe that the reason for your financial disaster was due to a lack of knowledge on your part; in that case, devote yourself to developing your knowledge. You may observe that it was due to blindly trusting someone you know; in that case, learn to do more due diligence and act less on emotional impulse. If you are objective, you will observe that your experience has some valuable lessons to teach you; but that lesson should never be to withdraw entirely from taking a risk. Because as Helen Keller – the deaf-blind American author and political activist put it, “Life is a daring adventure or nothing at all. Until next time, YOUR SUCCESS MATTERS!