How to Change Your Financial Situation (Become a Financial Powerhouse!)

Are you eager to find some passive income sources but are struggling with a dire financial situation?

Even if you’re deep in debt and have no savings, you can turn things around and create a life of financial freedom and develop passive income sources.

We’re going to show you some steps you can take to drastically improve your financial situation. To go from “paycheck to paycheck” to “sleeping well at night cuz I’m a financial powerhouse”.

Interested? Read on……..

Steps to Change Your Financial Situation

I’m going to be honest here: Taking the steps to change your situation is the toughest part. You’ll learn the knowledge, but you’ve got to implement what you’ve learned if you want to see things change in your life.

Your financial problems might exist for several reasons. Maybe you got laid off. Maybe you don’t make enough money.

Or maybe you were just never taught how to take control of your money and spending. This is a guilt-free zone. There’s no judgment here, because chastising you for past mistakes won’t do you a bit of good.

You’re reading this article and that’s a terrific start. Make a commitment to put into action the steps you learn here.

1. Acknowledge Your Part

This can be one of the toughest parts of changing your financial situation. As a domestic abuse overcomer, I had to learn a lot about acknowledging my part in my relationship with my ex-husband.

Yes, he chose to verbally and emotionally abuse me and our children. However, I chose to:

  • stay in the situation (I was too afraid to figure a way out of it and didn’t know if it was serious enough to leave)
  • believe his lies that I (or the kids) had “pushed” him to his level of anger
  • not set strong enough personal boundaries

Domestic violence is a touchy subject. Victims get very offended when a therapist or domestic violence advocate tries to make them see they played a part too.

I know I got offended at first. But acknowledging my part in the relationship has gone a long way in empowering me. It’s made me realize two things:

  • I’m stronger than I think I am
  • There are always resources and helps available

Victims (and I use that word carefully) of financial messes often think the same way. They have an “It’s not my fault” view of things.

And while it may be true that some of your financial situation isn’t your fault, there were likely steps you could have taken to prevent your situation or make it so it wasn’t so severe.

For instance, let’s say your financial mess was caused by a job layoff. You may not have been able to control the layoff, but you could have:

  1. managed your money better in the years before the layoff
  2. saved up some emergency fund cash in the years before the layoff
  3. implemented other sources of income in the years before the layoff

I realize you might be ticked at me right now. But I’m harping on this “accept responsibility” thing for one reason:

It is absolutely necessary if you truly want to change your financial situation.



Here’s the deal. If you don’t accept full responsibility for your financial situation, your situation will never change.

So the question becomes: How bad do you want your financial situation to change?

If you truly want financial change in your life, acknowledge your situation and what you’ve done to contribute to it.

Acknowledge. Accept responsibility or circumstance. Move on.

2. Assess Your Financial Situation

So, you’re still reading. I’m guessing you really, truly do want your financial situation to change.

AWESOME. I’m proud of you!!!

Now it’s time to face the music. Get a sheet of paper or create a spreadsheet on your PC.

Write down a list of all of your debts. Include medical bills and money you owe to family members and friends too. And don’t forget your mortgage if you have one.

Write down the amount you owe, the monthly payment, the interest rate you’re paying.

Now write down your assets: any money you have in savings, investments or retirement. Write down the value of your house if you’re a home owner.

Write down the value of any other assets you have such as automobiles.

Now subtract your liabilities from your assets.

This is your net worth.

Is it positive or negative? Don’t worry if it’s negative or not as high as you’d like it to be. We’ll work on how to get that net worth number higher later.

3. Make a Budget

You’ve accepted responsibility for your situation. You’ve assessed your situation.

Now it’s time to make a budget.

I know: the dreaded “B” word. I used to hate it too, until………….

Until I realized that having a monthly budget gave me POWER over my money.

When you start to create a budget at the beginning of each month (no you can’t just use the same one: each month has different expenses), you learn that you control your money instead of your money leading you around by the nose.

No more living on a whim, wondering if you’re going to make it till the next payday.

Give each dollar of your income a job and start telling it what to do.

“$100, you’re going here, into savings.”

“$200, you’re going toward extra debt payments so I can kick this backbreaking debt to the curb.”

“Cable subscription, you’re GONE. And that extra $75 a month, you’re going toward investing.”

“Random, unplanned fast food runs and big box store sprees, you’re gone too. More money toward investing.”

Cue the Kool-Aid man.


You’re in charge now, baby. And this is the step that will help you amass financial security and create passive income sources so you can start accumulating serious wealth.

Making a budget is pretty easy. I do it every single month and have for years.

(Hint: Having a free account with a company like Personal Capital makes it easy to budget and track your financial progress.)

Simply make a list of the month’s upcoming expenses and make sure you’ve got money left over after you pay the bills. Be sure to include spending for things like entertainment and incidentals.

And include a dollar amount to go into savings. Always treat your savings like you would any other bill: pay it monthly.

If you have more bills than you do income, you’ve got to cut expenses somewhere. Be more frugal on your grocery bill. Cut entertainment expenses or unnecessary memberships/subscriptions.

It might be painful at first, but when you’re sleeping like a baby at night cuz you’ve got cash, you’ll be glad you did.

Note: If you have no idea what you spend in certain areas, such as groceries, just guess. Or use this budget percentages suggestion chart.

Just start. And then adjust individual numbers as you get used to living on and working with a budget.

Most importantly: Stick to the spending amounts listed in your budget.

If you don’t follow your budget, there’s little sense in having one.

4. Start Investigating Passive and Other Additional Income Sources

Now that you’ve got a plan and some control over your money, it’s time to start looking into which passive and residual income sources will work best for you.

You can learn the difference between passive and residual income here. But in a nutshell, passive income is income you do work for up front and then sit back and earn from.

Residual income – at least our definition of it (there are several) – is income you earn on the side. You might call it side hustle income.

Having side hustle income – whether passive or residual – is a necessary tool for helping you become a financial powerhouse for many reasons.

First, that side hustle or passive income is all additional income from your main job. You could – if you’re disciplined enough – put every bit of it in an investment or retirement account.

Second, I’m a big believer in having multiple streams of income. Here’s the deal: When you only have one source of income you are way too dependent on that source.

For instance, let’s say your only source of income is your 9-to-5 job. If you get fired from said job, you are now without any income.

However, if you have multiple streams (or sources) of income, losing one may hurt but it won’t leave you without any income sources.

What Type of Side Hustle Income Should You Choose?

You can choose any type of side hustle income you want to start making extra money.

The sources of additional income aren’t really important as long as you have some – although some will bring you more money than others.

The important part is to increase your income and implement multiple streams of income into your life.

Multiple Streams of Income and the Lesson I Learned

As an independent contractor and business owner, I’ve seen this concept in action.

For many years, I had one main freelance writing client. This client was responsible for about 75% of my income.

When the client decided he was no longer going to be adding new articles to the site regularly, I lost 75% of my income. OUCH.

That sucked. But it was my fault. Why? I was coasting on this client’s business and assumed (never assume, right?) it would never go away.

Now I was left with a huge chunk of my income gone and bills that still needed paying. What did I do?

Well, after spending a couple of weeks kicking myself for depending too much on this client’s business, I went out and hustled.

I started advertising my business and got a few new clients. I worked harder on my real estate business (I’m a licensed realtor in MN and WI).

And I started looking into adding more sources of income to my income portfolio. Soon I was back in the saddle again, earning my prior income and being even more secure because my income sources were more diversified.

Lesson learned: Never ever depend on one main source of income as if it will always be there. Instead, be just as diversified in your income sources as you would in your investments.

Any investment advisor worth their salt will tell you to be diversified in your investments so that you won’t lose all your cash if one company or market fails.

You should treat your income sources the same way; diversify!

5. Use Your Income Sources to Save and Build Wealth

The goal with the extra money you earn – whether it’s money you’re not spending from your 9-to-5 or side hustle money – is to use it to create that financial powerhouse.

Buy shares in a crowdfunded or other real estate investment

Invest in blue chip stocks

Invest in peer-to-peer lending

Create a portfolio of dividend paying stocks

Decide how you’re most comfortable investing and then do it. Read books on investing if you have to. Or read blogs like this one.

Create an investment plan for yourself and get to work building wealth.


You’ve done it! You’ve learned – and hopefully implemented – a strategy to become a financial powerhouse!!

Do regular check-ins with yourself. Compare your debt, savings and net worth numbers of six months ago with what they are now.

The positive changes you see will motivate you to keep on going.

Are you ready to take control of your money?

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