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How to Recover After Making a Major Money Mistake

Susannah Snider

You really blew it this time, didn't you? You thought you had your finances under control but you somehow managed to blow your budget, run up a credit card bill, overdraw your checking account -- or worse.

The bad news is that you probably can't repair your financial flub quickly. "A lot of times, there's no quick fix to financial problems," says Jonathan H. Swanburg, a certified financial planner and investment advisor representative for Tri-Star Advisors in Houston.

The good news is that you're not out of luck. Most people can work their way past a money mistake, experts say. The first step is to recognize your flub and take steps toward fixing it. "Confronting that allows [you] to say, 'It happened. Now what?'" says Eric Roberge, certified financial planner and founder of Beyond Your Hammock, based in Boston. After that, you can start to undo the financial damage while making moves to prevent it from happening again in the future.

[See: 8 Big Budgeting Blunders -- and How to Fix Them.]

Here are three common financial mistakes -- and how to dig your way out of them.

You blew your budget. Your practical side said, "I can't afford this." But your impulsive side said, "Buy! This! Now!"

If you've managed to go badly over-budget on an item you can't afford -- or return for a full refund -- then you need to do some financial damage control to get back on fiscal track.

First of all, take a deep breath. You're not the first or last person to make this money mistake. "Finances are very emotional, and people often make big decisions impulsively," Roberge says.

But you're going to have to get your budget back in gear. Take a fresh look at your financial situation and figure out where you can trim expenses and save to make ends meet.

If you're working toward a financial goal, say, a winter vacation or retirement, you might have to push your timeline back to accommodate your budgeting blunder. "Make the goal less expensive or further out," Roberge says.

[See: 11 Expenses Destroying Your Budget.]

To prevent making impulsive budget-destroying purchases in the future, take a good hard look at what failed in your last budget. Was it too restrictive? Too lenient? Did you choose to splurge regularly on the wrong things?

"It all comes back to budgeting, planning and being realistic about what makes you happy," Swanburg says. "As long as you stick to the plan, it'll work out in the end."

You tried to be too clever. You had a brilliant idea that involved transferring balances through a series of credit cards. But it failed. Or you thought you'd do some clever accounting and -- suddenly -- you're staring at a huge tax bill. Yes, your cleverness got the best of you, and now it's time to own up.

"You see stuff like that where people do things where they think they're doing the right thing, but they screw it up," Swanburg says.

[See: 8 Personal Finance Myths Money Experts Want to See Disappear.]

It's time to deal with the consequences of your ill-advised money-making scheme, experts say. Forget the gambling mentality that promises you'll fix it with another clever move. Know when to call it quits. "When you're in a hole, stop digging," Swanburg says.

And next time, take more care before trying to make a too-clever money move. "When you're making a big decision like that, it can't hurt to bounce it off of someone else," Roberge says.

You didn't have a good defensive strategy. "An emergency fund is almost always the solution to life's little financial problems," Swanburg says.

In order to keep an unexpected expense, like a broken-down car, from derailing your financial plan, make sure you have some financial padding to cushion the blow. That way -- whether you overdraw a bank account, experience a job layoff, lend money to a relative who never repays you or whatever else -- you'll be able to bounce back with minimal effort.

Experts typically recommend having up to six months' worth of living expenses squirreled away in an emergency account. That way, an unexpected bill won't cause you to overdraw your bank accounts or run up credit card debt.

Outside of that, keep a cool head. "Panic never really helps," Swanburg says.

And admit to your mistakes. Trevor K. Harris, a certified financial planner and senior financial planner with Sonas Financial Group in Kansas City, says: "Recognize it, own up to it, move on and don't beat yourself up over it."

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