Successfully Starting Over After A Bad Financial Decision (2024)

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.

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Restarting Life When You’re A Financial Mess

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.

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.

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.

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 in 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.

Related: Emergency Fund vs Savings – What’s the Difference?

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

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 you’re 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 to keep 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.

Ways To Overcome Bad Financial 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.

Related Articles:

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Successfully Starting Over After A Bad Financial Decision (1)

Successfully Starting Over After A Bad Financial Decision (2024)

FAQs

How to recover from a bad financial decision? ›

7 Tips to Bounce Back from Financial Mistakes
  1. Don't Dwell on It. ...
  2. Take Stock of Your Situation. ...
  3. Get Back to Basics. ...
  4. Freeze Your Spending. ...
  5. Don't Be Tempted by Quick Fixes. ...
  6. Take Care of Your Health. ...
  7. Start Preparing for Emergencies.

How to stop regretting bad financial decisions? ›

Here are 5 steps to help you move forward after a financial mistake and love yourself again:
  1. Step 1: Acknowledge the mistake. In order to move on, you need to accept and acknowledge whatever financial mistake you have made. ...
  2. Step 2: Talk about it. ...
  3. Step 3: Focus on the present. ...
  4. Step 4: Don't stop learning. ...
  5. Step 5: Let go.

How to rebuild your life after financial ruin? ›

5 steps to help you recover from a financial setback
  1. You can succeed. Accept the reality of your challenge and handle it quickly and aggressively. ...
  2. Know your financial resources. ...
  3. Set up a budget and prioritize expenses. ...
  4. Take action now. ...
  5. Seek out professional help.

How to start all over again financially? ›

Here are six simple steps you can take to help set yourself up for financial success in 2024 and beyond.
  1. Revisit your household budget. ...
  2. Check your emergency fund. ...
  3. Tackle your debt. ...
  4. Check in on your retirement savings goals. ...
  5. Make sure you're on track with your other investing goals. ...
  6. Review your life insurance policy.
Jan 26, 2024

What is considered a bad financial decision? ›

"Any financial decision that endangers your daily living expenses or brings on too much debt is a red flag," he says.

How do you mentally recover from financial losses? ›

Surviving . . .
  1. Acceptance. Accept the fact that this loss has really happened to you. ...
  2. Build and use your support system. Find people you trust: friends, family, spiritual leaders. ...
  3. Get a different perspective. Put the brakes on rumination. ...
  4. See what you can learn. There's a lesson in everything. ...
  5. Find the gifts.

What is one financial mistake everyone should avoid? ›

Mistake #1: Spending every penny

Here's the secret to achieving most financial goals: saving money. But you can't save if you spend everything you earn.

What is the biggest financial mistake? ›

Overspending on housing leads to higher taxes and maintenance, straining monthly budgets.
  • Living on Borrowed Money. ...
  • Buying a New Car. ...
  • Spending Too Much on Your House. ...
  • Using Home Equity Like a Piggy Bank. ...
  • Living Paycheck to Paycheck. ...
  • Not Investing in Retirement. ...
  • Paying Off Debt With Savings. ...
  • Not Having a Plan.

How do you fix financial trauma? ›

Open communication: One of the most important steps in coping with financial trauma is to open up and discuss the struggles with trusted friends, family members or professionals. Sharing the burden with others reduces feelings of isolation and shame.

How to start your life over after losing everything? ›

How to Start Over Your Life When You Lose Everything
  1. Shift your mindset.
  2. Reflect on your past experiences.
  3. Set clear goals.
  4. Build a support system.
  5. Develop new skills and knowledge.
  6. Explore new opportunities.
  7. Take care of your well-being.
  8. Overcome obstacles and build resilience.
Jul 11, 2023

What to do when you lose everything financially? ›

What to do When you Lose Everything
  1. Speak to a debt counsellor or financial adviser. ...
  2. Don't be afraid to be vulnerable and accept help in whatever form it takes. ...
  3. Be brutally honest with yourself. ...
  4. Strip down your spending and track every last cent. ...
  5. Work hard.

How do you overcome financial guilt? ›

How to Overcome Budget Guilt
  1. Remember that Perfection Isn't Possible. This is probably obvious, but it's a helpful thing to repeat: everyone makes mistakes. ...
  2. Don't Sweat Individual Moments of Weakness. ...
  3. Don't Lose Sight of the Big Picture. ...
  4. Remember that Your Happiness Doesn't Have to Look Like Anybody Else's Happiness.
Jun 21, 2023

How to move and start over with no money? ›

How to Move with No Money
  1. 1 Relocate to a town with a low cost of living.
  2. 2 Apply for a driveaway company.
  3. 3 Move to a place with a relocation initiative.
  4. 4 Borrow a friend's car.
  5. 5 Move with a friend.
  6. 6 Lease a sublet.
  7. 7 Couch surf at someone else's place.
  8. 8 Stay at a hostel temporarily.

How do you build wealth when you're broke? ›

10 Steps How To Build Wealth From Nothing Starting Today
  1. Educate yourself about money.
  2. Get a regular income source.
  3. Create a budget.
  4. Have enough insurance (but don't over-insure)
  5. Practice extreme savings from your income.
  6. Build an emergency fund.
  7. Improve your skill set.
  8. Explore passive income ideas.

How do I start over with nothing at 50? ›

How to start over at 50 with no money
  1. Wait it out at your old job if possible. A paying job that you hate will still give you financial stability. ...
  2. Let go of the negative self-talk. ...
  3. Build the new you. ...
  4. Update your resume with transferable skills. ...
  5. Take free courses to improve your skills.
Jun 7, 2022

How do you deal with financial guilt? ›

Think about the way you want to feel about money in future. You might have goals, dreams or aspirations that relate to money. That could be having enough saved to protect yourself in an emergency, or being able to travel around the world when you retire. Use those goals to guide your budgeting.

How do you get out of a deep financial crisis? ›

  1. Maximize Your Liquid Savings.
  2. Make a Budget.
  3. Minimize Your Monthly Bills.
  4. Closely Manage Your Bills.
  5. Maximize Non-Cash Assets Value.
  6. Pay Down Credit Card Debt.
  7. Get a Better Credit Card Deal.
  8. Earn Extra Cash.

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