Money Girl answers a listener question about getting a mortgage with bad credit, and gives tips for surviving a financial crisis and rebuilding your credit as quickly as possible.
A Money Girl listener named Robin, from Mississippi, asks:
"After my husband lost his job, we couldn’t pay our mortgage, and lost our home due to foreclosure in 2008. Since then, we’ve felt hopeless, and haven’t paid much attention to our finances. But I’m 45, and ready to stop sticking my head in the sand.
We want to buy the home that we currently rent—but don’t know if we could ever get a home loan with bad credit. This is a terrible, embarrassing, and scary situation for us. But I do have a great job, with benefits, as a nurse, and am contributing the maximum to my retirement plan. What’s your advice?"
Later in this episode, I’ll answer Robin’s question about getting a mortgage when you have bad credit. But first, we’ll cover tips for some of the other things her question brings up, including surviving a financial crisis, getting back on your feet, and rebuilding your credit as quickly as possible.
How to Survive A Personal Financial Crisis
At some point, almost everyone experiences an unexpected crisis that rocks your financial world. It could be losing your job, getting a huge medical bill, or having your car break down at the worst possible time.
Here are 5 tips to manage the emotional stress that you might feel during a personal financial crisis:
Tip #1: Stay Positive
As difficult as it might be to put a financial crisis into perspective, it’s critical. No matter what challenge you’re facing—such as foreclosure, bankruptcy, or a mountain of debt—you’re not the first. Millions have gone through a similar financial disaster and survived.
Now, I’m not trying to minimize the stress that comes from a financial catastrophe. Just remember that creditors can sue you and garnish your wages, but they can’t put you in jail or eat you!
Be grateful for what you do have, and remember that you’re still better off than the millions of people on Earth who struggle to find food and clean water on a daily basis.
See also: The Law About Debt Collection Harassment
Tip #2: Accept the Situation
Life throws us financial curveballs. The key to handling them successfully is to be realistic, not to stay in denial. Robin mentioned that she’s been putting her head in the sand for some time. Unfortunately, if you don’t face money troubles head on, you can compound the damage.
Instead of focusing on the problem, being angry, or feeling stressed out, channel your emotions into finding solutions. That means stop internalizing the issue or keeping it a secret, and start talking about it with people such as your family or counselors.
Turn to people you trust, such as a spiritual advisor, a financial adviser, a legitimate credit counselor, or an attorney, depending on your situation. They can help you consider solutions to clean up the problem and make sure you never have to deal with it again.
See also: 10 Ways to Deal with Money Stress