The SEVEN Step Financial Survival Plan

It would be fair to say the there are rough seas at the moment; everyone’s “family ship” must be experiencing the rise and fall of the Worldwide Economic depression in some way. Unfortunately there are harder times ahead.

But don’t let that worry you. Through this article I aim to share with you two things: one, a Seven Step Financial Survival Plan I heard about this week, and two, some inspiration from a very wise man. Let’s start with a comment from Napoleon Hill, author of the famous book ‘Think and Grow Rich’ (first published in 1937)

Never, in the history of America has there been so great an opportunity for practical dreamers as now exists. The six year economic collapse has reduced all men, substantially, to the same level. A new race is about to be run. The stakes represent huge fortunes which will be accumulated within the next ten years. The rules of the race have changed, because we now live in a CHANGED WORLD that definitely favours the masses, those who had but little or no opportunity to win under the conditions existing during the depression, when fear paralysed growth and development.

Please take the time to read that paragraph a few more times. There’s enough content in that one paragraph for me to write five or six articles. But you read it again, and it will speak to you where you need to hear it most.

I caught up with a friend of mine last week, John Erkkila the Founder and CEO of New Zealand Home Loans. He shared with me a Plan they are implementing in their company to help their thousands of clients, some of whom are really hurting at the moment. So if you’re in need of a survival plan, and are wondering how you are going to meet your mortgage commitments and other bills, consider this plan as a starting point.

SEVEN STEP FINANCIAL SURVIVAL PLAN

Work through these steps in this order:

1. Recognise where you are.

Take a moment to sit down and write out your current financial position. Include all aspects of income, expenses, assets and liabilities. An easy way to do this is to prepare a simple Statement of Position. Create a spreadsheet that outlines Assets and Liabilities, Income and Expenditure. This will highlight how URGENT your survival need really is!

2. Seek help!

Only a stubborn fool refuses to seek help when it’s needed. Get a financial coach, an expert in debt management, or a budget advisor to sit with you and help you out. Do you know the real benefit of doing this – it’s the accountability it creates to someone else. You will find powerful motivation in this accountability.

3. Determine your goals – big and small

This is the time to put everything on the table and prioritise. What are your key aims for the next 3-6 months? What are you striving to achieve over 12 months? And what are you determined to work towards over the next three years? These should all be reviewed and renegotiated. Everything is open to being challenged and put on hold if necessary.

4. Review the structure of your debt.

All loans need to be reviewed to make sure they are appropriate. Check out the interest costs, the terms, and the payment structures. Sometimes your debt coach can recommend ways to make things a little easier through tough times. One example is a loan payment holiday. Be careful of abusing this option as all it will do is delay your pain!

5. Review ALL expenses.

Take a highlighter to your bank statements and credit card statements and review everything. I suggest you use our Revealing Your Financial Future tool to examine your spending and identify what needs to be cut. Use a big knife!

6. Review ALL income.

In hard times people often comment that spending is hurting them but fail to recognise they aren’t earning enough. What can you do to create extra income? In times of hardship it is common for people to take on extra work. I heard a salesperson say that they had found a night cleaning job during the last recession. Pride, Schmide. Get off your high horse and do what it takes!

7. Can I sell anything?

This is last on the list for a reason. Only once you have worked through all of the steps above in order do you consider this option. Panic is the worst thing you can do. So carefully consider your options so that you make wise decisions here. And I would also recommend asking a friend to be your sounding board as they will bring more objectivity to the situation. Remember, a problem shared is a problem halved.

When John and I discussed this list we agreed that everyone would benefit from going through this exercise, not just those who are screaming for help. I would encourage all of you to take a night out to sit on the couch and have a conversation about the seven steps above. Kathy and I have been through this process and can vouch for how powerful it is in bringing solutions to the forefront.

To finish on a positive note, don’t view a negative environment as a limiting factor. Often out of adversity comes amazing breakthrough. Someone said recently to me that “death always brings new life”. Someone else wrote “for wheat to be harvested the seed of grain must first die in the ground”. One of the aspects I love about the book Think and Grow Rich is the way the author recounts stories of those who have broken through adversity, suffering, or near-death to experience a new season of abundance. If you get a chance to look at his book, make sure you check out the quality of the people he interviewed to develop the material. You will be shocked and amazed! In addition, he sees you as the solution for the future of the world.

I would like to leave the closing words to Mr Hill.

The business depression marked the death of one age, and the birth of another. This changed world requires practical dreamers who can, and will put their dreams into action. The practical dreamers have always been, and always will be the pattern-makers of civilization.

Phil Strong
CEO Wisemoney