Successfully Starting Over After A Bad Financial Decision

Restarting Life When You’re A Financial Mess

Most of us at some point in our lives have made some terrible financial decisions that have set us way back from where we’re trying to get.

Whether you’ve taken out a small fortune on student loans or piled another car loan on an existing one by surprising your husband with a new truck, we’ve all been there. Guilty.

Some of these choices made years ago will still have repercussions haunting us many years from now. 

Sounds depressing, I know. While you could toss in the towel and cry defeat, these depressing scenarios don’t have to own you forever.

It’s time to take control of your finances, instead of allowing them to control you. Consider the following advice on helping you start over after you’ve made a bad financial decision.

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Back Out If Possible

If you’ve just recently made that huge financial mistake, it might not be too late to fix it.

Even if you just bought a new car over the weekend and have felt sick about it since, you can still back out, even if it’s already Monday. Regardless of whether the paperwork has been signed, you still have a good chance to make it right.

Read through the contract and see if you can get out. Many of these contracts have a few days of grace for you to reconsider.

Are there other financial burdens you’ve created that you can alleviate? That might mean selling that bad decision just to take some of the stress out of your life.

Taking a loss on an item may end up being a financially wise decision, especially with cars. A $40,000 truck will quickly depreciate, often before you’re able to pay off that balance.

By selling the car while the value is still high, you may only need to take out a loan for a few thousand dollars. This is far more reasonable to do and will get you on the right financial track much faster than had you kept the car.

two women standing outside next to each other nervously clutching their own hands

Learn From Your Financial Mistakes

Bad decisions might be hard to bounce back from, but turn it into a learning opportunity. Most people learn from their mistakes, and this one happens to be yours.

Dwelling and beating yourself up about your mistake helps no one, especially you. It’s easy to get caught in a cycle of self-pity or the blame game. Instead, own it and move forward. 

For Heaven’s Sake: Forgive Yourself

Another important step after making a bad financial decision is to forgive yourself. You don’t need to continually beat yourself up every time a bill comes in the mail that reminds you of that purchase.

Many people live with regret for many decisions in life. Choose to move past it, forgive yourself, and find ways of getting yourself back on the right track as quickly as you can. 

Use Your Mistake As Motivation

Like I mentioned earlier, that bill might show up in the mail every month, demanding to be paid. Use it as a reminder and motivation for getting yourself out of the mess you’ve fallen into.

Using mistakes as motivators instead of discouragement allows you to grow and fix your financial situation faster. Motivation is what you’ll need to build momentum and gain traction toward success.

Tighten Your Expenses

You’re going to have to tighten your expenses for the foreseeable future. This includes going out to eat less, not going to the movies as often, and not buying any other toys that catch your attention. You have to take drastic measures to unbury yourself. 

Rice, beans, and Ramen noodles are on your dinner menu a lot more at this point. Shopping for name brand shoes and clothing at the mall should also be reconsidered. 

While this might seem like a death sentence to you, you’ll be financially better off much quicker. Again, tighten your expenses today, for a better financial tomorrow. 

Related: This is my favorite recipe for fast and cheap fried rice.

woman's arms on laptop budgeting with coffee and blue wallet flat lay

Refuse To Take On Any More Debt

When you’ve been down in the dumps for a long period of time, it’s easy to give in to your temptations and desires.

Don’t allow it!

Stop taking out any more debt, loans or making bad spending choices. Even if you have to cut your credit cards up or burn them in fire, decide now that you’re not going to resort back to the decisions that got you into this mess in the first place. 

Prepare For The Future

It’s in your best interest to get ahead by setting money aside in an emergency fund. Life throws all kinds of curveballs at us.

Being prepared financially will keep you from turning to your credit card to bail you out. Whether it’s a flat tire, blown engine, or a hospital visit that will cost you a small fortune, it’s better to have it saved away ahead of time. 

Dave Ramsey recommends that you save at least $1000 in an emergency fund, which will cover most unexpected headaches that come to your direction.

After you’ve saved that amount, it’s wise to have at least enough money set aside to cover 3-6 months worth of expenses. You never know when you could get laid off and find yourself without a job to pay your bills.

Start A Part-Time Job

Maybe you’re already putting in a 9-5 job five days a week. What do you say to a couple more hours a week with a part-time job?

This isn’t a permanent solution, just to help you get back on your feet and help you cover that loan each month. There are many jobs that can be found using the skills you already possess.

Using online forums such as NextDoor App and your town’s Facebook group allows you to offer your services and find clients for free. The best part of running your own part-time job is that you can choose the hours that work best with your schedule.

If you’d rather not have to run your own part-time job, there are many places looking for people to work nights and weekends. Bartending, waitstaff, and delivery drivers earn tips and their shifts tend to be flexible.

Related: This side job can easily earn $500/month

Woman on laptop in bed working on a part time job

Tapping Into Your Retirement Savings Isn’t Worth It

Even though you might be going through rough times financially, while many would tell you to take out a loan or tap into your 401k or IRA you’re only dimming the lights on your future. 

Resist the urge to get help by taking out your money early. Leaving that money in your 401k until your ready to retire, will allow it to grow exponentially the longer you allow it to grow.

Not only that, but there are all kinds of fees and taxes that you will have to pay as well. Taking money out early from retirement savings is subject to your regular tax rate as well as a 10% early withdrawal fee.

This is equivalent to borrowing money at a 35-45% rate! You’d NEVER take a loan at this rate so why would you take that amount from your retirement savings?

Retirement savings loans are also a poor option. For one, they can’t be repaid early. Only on time or the entire payment in full.

Also, if you unexpectedly lose your job, the entire amount is due in full or you’ll be automatically subjected to the early withdrawal rates mentioned above.

No one plans on losing their job. It all works out until it doesn’t. This is another financial decision that will continue keeping you in financial ruin.

Don’t Allow History To Repeat Itself

In school, you were taught that history has a way of repeating itself. You tell that history lesson to shove it! You’ve learned from this mistake.

Learn from your mistakes and don’t fall back into the debt you were once in. You’ve owned up to that mistake, and now you can help others avoid making similar bad decisions.  

Conclusion

I hope you found the above helpful in getting you started in the right direction after a bad financial situation.

Tell me how you got out of a jam financially in the comments, and describe the mindset you had to get you out of it. I’d love to hear your story. 

Steffa Mantilla round headshot
Steffa Mantilla

Budgeting & Debt Payoff Expert

Steffa is the founder behind Money Tamer. After paying off over $80,000 in debt through budgeting, she now teaches families how to get their own finances in order. Steffa’s background in operant conditioning and behavioral husbandry has given her an understanding of motivation and motivators. She uses this training to help people understand the reasons “why” behind their money behaviors and how to successfully change them. You can learn more about her here.

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man and woman's hands gripping one hundred dollar bill pin about starting over after a bad financial money decision

Ways To Overcome Bad Financial Decisions

2 thoughts on “Successfully Starting Over After A Bad Financial Decision”

  1. I was in such a bad spot, particularly this one week. I has zero dollars, I was working, eating only cup noodles and whey protein, hungry and tired.

    I kept my attitude positive, I researched online how to eat on a budget , and came across tips on going though a financial hardship. When I learned to frame my situation as temporary, it was easier to start climbing out of it!

    1. I’m so glad to hear that! Mindset is definitely a HUGE part of it that many people overlook. There aren’t any quick-fixes but believing your situation is temporary and making small steps in the right direction adds up to enormous change. Congrats!

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