How to Recover Financially from a Life Upheaval

by Tracy · 36 comments

Dealing with a financial crisis is not easy, especially since they are almost always accompanied by other stressors such as losing a job, a divorce or a loved one experiencing a serious illness. Quite often, dealing with money is at the bottom of your list of priorities as all of your energy is poured into dealing with the emotions and logistics of dealing with other precipitating events.

Eventually, the time will come when you have to focus some of your attention on your financial situation even while your life is still in turmoil. It’s not easy. We’ve recently been through this in my own family after a sudden and tragic death in my husband’s family. We’re still in the process of getting our finances back on track and I’ve learned a lot from dealing with this crisis, pointers I want to share with you.

Don’t Beat Yourself Up

After the dust has cleared and the bills start coming in, it’s easy think of ways you could have spent less. Saving money can’t and won’t always be your first priority, particularly during times of emotional stress and upheaval. What’s done is done and chances are you dealt with the situation as best you could considering the circumstances. So don’t add guilt to your list of burdens. That’s one of the worst things you can do.

If you have a partner or spouse, it can be difficult to talk openly with each other about your financial situation without placing blame or becoming overly emotional. Do your best by staying with facts and emphasize that this is something you’ll be working on together. You’ve both been through a difficult experience, so be kind and loving but also insist on being treated with respect.

Face Reality

If you’ve been through the wringer, it can seem almost impossible to do even little things like open the bills or look at your bank balance. That’s completely human and understandable, but things won’t get better until you know the situation you are facing. Often, the dread of what you’ll find is much worse than how you’ll feel after you’ve faced it.

Making a simple spreadsheet can not only help you stay organized but also give you something concrete to do to help you feel like you’re gaining control of the situation. A heap of open bills and bank statements can be very disheartening and overwhelming, but a neatly filed list will look more like something you can tackle.

Ask for Help

If you have fallen behind on your bills and don’t have the cash on hand to get current, there is no harm in calling to ask if something can be worked out. Even if not all companies care about you as a person, most want to get paid and understand that working with you is the best way to accomplish that. Be honest about your situation and don’t let yourself be pressured into making commitments that you aren’t sure you can keep. You can always ask for time to think about or discuss any proposed solution with your partner before agreeing to it.

Family and friends might also be able to offer you assistance. Even if cash help is not a possibility, they could offer valuable advice, help with a job search or move, childcare or even just a friendly ear. I’ve often been surprised how often somebody has just the tip or idea that was exactly what I needed, but I would never have known had I not opened up about my situation. Independence is a wonderful personality trait but don’t allow it to isolate you and deny you potential help.

Never feel ashamed about applying for any government or charitable aid that you need and qualify for in times of crisis. These programs were set up to help people just like you and there is absolutely no need to feel shame in taking the help. You contributed when times were good and you can pay it forward when times are better.

Make a Plan

Once you know what you’re working with, you can form a plan to get you back to financial health. Be sure to think about how you’ll build up a new emergency fund; it should be considered a non-optional necessity. You will need to:

  • Set priorities. What needs to be taken care of first? What can wait? Making sure you have a place to live and food to eat are primary. If the situation is severe, you might have to make really tough choices like selling a house or filing for bankruptcy – these should be discussed with a legal expert before you take actions that might limit your options.
  • Make a budget. If at all possible, allow a little room for things that will make you feel better. You don’t need to spend a lot of money, but setting aside enough for an inexpensive date night or gas to visit an out of town friend can help you not feel deprived.
  • If feasible, look for ways to earn extra cash to make the process go faster. In our situation, I started freelance writing to bring in income and give us more stability. If you are getting unemployment benefits or other government aid make sure you check the rules first. Sometimes, even setting up a part time business can make you ineligible for assistance. You’ll have to carefully weigh the costs versus benefits of earning some money on the side versus any effects it will have on your benefits.
  • Set goals for your long-term financial stability, including having an emergency fund. Make sure you have adequate insurance and repair any dings to your credit record.

The Good News

Although it can take many months or even years, you can recover from a serious financial blow. The first step is taking actions that will remind you that although you can’t control everything, there are many choices that you can make to help your situation improve. It might not seem fair to have to worry about something as mundane as money during stressful, painful life events but keeping your finances in order is one way to ensure that your life has the stability needed to help you fully recover.

Have you ever dealt with a serious financial setback due to a stressful, life-changing event? How did you turn the situation around?

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{ read the comments below or add one }

  • laura says:

    Hey does anyone know of surveys that really pay?

  • laura says:

    Hey does anyone know of a real job that I could assemble products at home, that really pay?

  • Vincent D says:

    Though it’s ok to give yourself time and take baby steps to standing on your feet again, I feel a little bit of financial planning goes a long way in helping you cope with any unforeseen circumstances.


  • Michelle says:

    Thank you Tracy. Feeling shame and guilt have been my pitfalls. Thank you to all who responded. It’s helpful to know I’m not the only one out there. Also to all who mentioned the higher power, and remembering that perhaps there’s a plan in the works that even I don’t know about.

  • Marcy says:

    Good, practical advice. Thanks.

  • John Williums says:


    I am really impressed by this post. You described your personal financial crisis and how you manage it, as a lesson for the people who are suffering from financial crisis. I am going to follow the way of getting out of debt. I expect more such posts from your end..Thanks ..

    • Tracy says:

      Hi John, thanks. I’ll post more if you’ll post more. I think we all have so much to learn from each other and it’s so inspiring to see others succeed.

  • Stacey Tate says:

    My plan was to just wait for a huge computer crash to wipe out everyone’s debt. I was hoping Y2K was going to be my way out….I guess I have to wait until Y3K now.

  • Margaret says:

    This article is a great inspiration and reminder for those in dire straights to know that it is possible to recover from nearly any financial crisis. And it helps to know you’re not alone, and if others can do it, so can you.

    • Tracy says:

      I think feeling like you’re alone and that everyone else has things completely under control makes a bad situation so much worse.

  • Cd Phi says:

    Many people I know seem to disregard freelance as a side occupation because it’s so unstable but I mean when you have a normal 9-5 job, those extra hours put into freelance can generate a decent amount of side income.

    • Tracy says:

      Freelancing can be an excellent income supplement, especially to build up an emergency fund or to throw extra money at paying off debt.

      • laura says:

        Tracy hello There!
        I am in need of a job online, do you happen to know any of them, if so are they for real?

  • JD at I Do Things says:

    This is a great article. We had a mini-upheaval after I had to be hospitalized for 5 days. The bills are still trickling in. Money matters always make me feel nervous and I prefer to avoid discussing them, but once my husband and I just sat down and talked about everything, I (and he) felt much better.

    • Tracy says:

      It doesn’t seem fair that for most of us it’s not just money problems, it’s also dealing with an illness, a job loss, a death or the end of a relationship.

      I really do feel the anxiety over facing the problems is so much worse than the punch in the gut once you take it all in. Yes, it does hurt for the moment but then you feel so much relief from knowing and being able to make a plan.

  • George Angus says:


    Outstanding article. Excellent advice for those of us facing these tough times. I’d not seen some of these suggestions before so I’ll be bookmarking this for reference as I try and get my financial life in order


    • Tracy says:

      Thanks George. I think the important thing is to understand that this is just a problem with a solution and not to get bogged down in feelings of shame or guilt. It’s not always easy when you’re dealing with money problems as a result of other difficulties in your life, but keeping control on that aspect of your life can help with your overall recovery.

  • MoneyNing says:

    Tracy, I’m happy to read that you are already on your way out of the terrible tragedy in your husband’s family.

    I love the point about staying with the facts, especially when we are talking about disputes with our significant other. I think most of the time, we get emotional and tend to blame others for the whole situation, which is not warranted. By staying with just the facts, not only will the situation be resolved quicker but it won’t leave a bad scar in the relationship.

    • Tracy says:

      It is hard not to get emotional and get into being defensive and assigning blame. It’s very human.

      • MoneyNing says:

        I totally agree. Another solution is to apologize QUICKLY. Sometimes it’s hard to control your emotions on the spot but as soon as you cool down, there’s a definitely need to perform “damage control”.

  • Jessica Bosari says:

    I agree that there needs to be room for prayer, or at least the recognition of a higher power or a greater plan in the recovery. It’s the recognition that you are not always in control, and that better things are on the way. I think that prayer is a form of meditation that clears the mind and centers us, even when everything around us is haphazard. Facing the problem is vital to making a plan and a plan is the first step to feeling strong again. It’s a balance of personal empowerment and submitting to what you cannot control.

    • Tracy says:

      Hi Jessica. I think that faith and a belief in a higher power are such personal things and what works very well for one person in that area doesn’t for another.

      We all have values or beliefs that give us hope and sustenance and strength during dark times and calling on those is a good first step.

  • Nathalie Hamidi says:

    I once read Karyn Bosnak’s story, she was one of the first internet panhandlers. She succeeded, with the help of her thousands readers and a lot of good choices (like what I read from your article), to repay all her debt and start anew, with a new perpective on life and “necessities”. I really recommand reading her book Save Karyn, which is very funny, terrifying and uplifting at the same time.

    • Tracy says:

      I will have to check that out Nathalie. I seem to remember a lot of very mixed feelings about what she was doing at the time, but at least she faced her problems and made a plan to deal with it. That’s much better than living in denial.

      • Nathalie Hamidi says:

        I thought too that internet panhandling was definitively a bit crazy, but Karyn Bosnak has a lot of humour and is quick witted, and was able to laugh at herself and learn from her mistakes. It is really a life lesson, that no matter how much money you make or how much money your parents make and you were raised with, it is possible to go overboard and sink in debt over unnecessary things in a matter of months or weeks.

        • Tracy says:

          I’m sure it wouldn’t have worked had she not given people some entertainment value for their money.

  • Jen says:

    All great advice but one of the most important things is not to beat yourself up. There is nothing like a bad attitude to add to the snowball effect. Everyone stumbles from time to time, learn from your mistakes and come out swinging.

    • Tracy says:

      Yes, beating yourself up does no good and is unproductive. Being kind to yourself doesn’t mean you won’t learn your lesson, in fact, I think it can be more difficult to learn from your mistakes if you make yourself feel bad and guilty because of them.

  • David says:

    Good advice – especially the part about calling people who you owe money to and trying to work something out. As someone who used to make collection calls, I can tell you that if I know someone is actually trying to pay their debt or is facing legitimate problems, I would do whatever I could to help them.

    Of course, not all collection people have the same flexibility or moral compass – it’s best to get ANY agreements in writing prior with them.

    Ignoring bills, though, doesn’t make them go away and a lot of times can only make matters worse – especially if there’s any kind of penalty for paying late. Only when you truly know what you’re up against can you begin to dig yourself out of the hole.

    • Tracy says:

      David, that was the hardest part for me. Part of you feels if you don’t face it, it’s not quite real which we all know is false.

      And that is such a good point about getting the arrangements in writing. Even people with the best intentions can explain things poorly or make a mistake in what they can offer.

  • Cindy Platt says:

    This was a priceless post today. We have persevered through financial upheaval and as I read along I found myself nodding and knowing that we have made the best of the situation and that the worst has happened. “The first step is taking actions that although you can’t control everything there are many choices that you can make to help your situation improve.” This is so true. The final step is knowing your family comes first and that you are constantly taking steps to move forward and fill the home with as much peace, frugality and fun on a shoe string as the situation lends itself. Turn lemons into lemonade and make it an appropriate life long lesson for the entire family. Even if I had bajillions in my bank account I would still teach my children about money matters and how to navigate in a fiscally austere way. Thanks for the awesome checklist.

    • Tracy says:

      Hi Cindy. It’s true, family does come first and even when you’re in the midst of a financial crisis you can still love each other and have peace with the situation. As long as you know you have the ones you love supporting you, nothing seems insurmountable.

  • kt says:

    i think that one other thing that one has to do is ask for God for direction because maybe the failure is part of his greater plan for your life. I have gone through this kind of trial and that is what i did

    • Tracy says:

      Hi KT, I think that having faith in something bigger than yourself does help provide the strength and assurance you need to get through hard times.

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