Have you ever experienced a personal financial crisis, or PFC?

If so, you’ll know that it’s not just your bank balance that suffers. A financial emergency has physical and emotional consequences too, and can feel as though your whole life is about to come crashing down like a house of cards.

But with discipline and some hard work, there is a way out. Here’s our six-step guide on how to handle a PFC, so that you can turn things around as quickly as possible.

1. Understand the big picture

Before anything else, draw up a list of all your assets and debts to get a bird’s eye view of where you’re at financially. Then, build a budget to work out where your money actually goes.

It’s simple to do. In one column list your income and in another pull together all of your regular and irregular monthly expenses.

Run a fine-toothed comb through last month’s receipts and bank statements to make sure you’ve listed expenses accurately.

2. Set smart financial goals

If you’re in a sticky financial situation, your main goal is probably to get out of it as quickly as possible, which is perfectly reasonable.

But it’s not a good financial goal.

A good financial goal has a definite deadline and can be broken down into smaller, more manageable steps

For example, it’s much better to say, “I want to be rid of my credit card debt by a set date, which means I need to repay $150 a week off my card”.

3. Take control of your spending…

With a budget and some well-defined goals to work towards, it’s time to take control.

Think about your spending in terms of wants and needs. Needs are non-negotiable, for example you’ll always need to make room in your budget for groceries.

Wants are nice to haves such as gym memberships, new clothes or eating out, and if you’re in the midst of a PFC these should be the first things to go.

4. And your debts

First, look at whether you can minimise the interest you’re paying, for example through a credit card balance transfer or by consolidating multiple debts to reduce the overall interest you pay.

Next, try to channel all of your additional money into making extra repayments, which will save interest and help you pay off the debts faster.

(A quick note: Don’t be afraid to use your savings to make extra repayments. Money in the bank only earns around 3 per cent these days, while credit cards or personal loans still charge interest rates in the double digits.)

Finally, if you’re having trouble repaying a debt or bill, speak to your lender or biller immediately. They may be willing to negotiate more favourable terms and you could avoid a black mark on your credit report.

5. Don’t go it alone

If you’re drowning in debt or simply don’t see a way out, there is help available.

Financial counselling is a free service provided by many organisations and is aimed at helping you get back in control of your money.

Contact Financial Counselling Australia on 1800 007 007 to find a counsellor near you.

6. Plan for the next PFC

Hopefully, the steps we’ve outlined help you take control and get through your PFC (and improve daily financial habits too).

But a PFC could happen again, so make sure you’re prepared.

Start setting aside money in a savings account for the purpose of covering unexpected expenses. This is what’s known as a ‘rainy day’ fund.

And make sure to do a full review of your insurance, both for your things (think home, contents and car for starters) and for you and your family (life, income protection, health insurance and total and permanent disability).

This will ensure you can weather the next PFC if it comes along.