Finances don’t always go according to plan. Emergencies happen such as sudden job loss, a significant home or auto repair, or medical bills. Now that you’re experiencing the financial struggle, you’re probably lost on how to handle things going forward. Take a deep breath and start thinking about a plan to keep your finances in order. Its not the end of the world. Life is a roller coaster. Learning how to cope with the good times and bad is what its all about. Hunker down, get a grip, and move forward.
Explore the Circumstances
Evaluate your situation in pieces. Worrying endlessly about the problem isn’t going to fix it. It’s stressful to deal with, but examining the circumstances surrounding your situation in a thoughtful manner and taking steps one day at a time will ensure a successful and damage minimizing outcome. Ensure that you know how the problem occurred, whether it was a loss of all or some of your household income, a considerable repair expense you weren’t prepared for, or a sudden medical condition that gave no warning. These tips can help you avoid encountering the same problem in the future.
Put important expenses first
Weigh your expenses and determine which ones are the most important if you can’t afford to pay everything that you owe. It’s more important to pay your mortgage or rent, than your cable bill. The same applies to food. Carefully weigh the necessities and wants of your budget and pay as much as you can afford, but don’t cut yourself short on areas such as food and shelter. Also keep in mind, various companies and sources do negotiate. If you don’t ask, you’ll never know. Especially hospital and medical bills. Not only will they work terms out for you, but sometimes they will take a significant balance reduction for an all cash settlement.
Look for ways to cut down on your daily, weekly, or monthly expenses. Make your coffee at home instead of going through the drive-thru or pack your lunch. Cut down your phone plan to one with fewer minutes or data to save every month. Trim down or eliminate your television subscription and utilize free services such as an over-the-air antenna to get local channels. Local libraries typically allow movie and television show rentals to provide free sources of entertainment during hard times. You’ll be surprised how quickly cutting out a little bit here and there contributes to your monthly budget.
Work out a payment plan
Call your debt collectors and work out a payment plan if possible. These companies want to receive their money and are usually more than willing to make an arrangement that works for both of you without putting you deeper in debt. The concept applies to credit cards, medical bills, or utilities such as electric and natural gas. In a potential long-term financial struggle such as a job loss, you should consider re-negotiating the terms of your mortgage with your lender to ones that are more favorable for your financial situation. It’s in their best interest to work something out with you. Many companies offer hardship programs as they understand that financial problems can happen unexpectedly.
Figure out a way to generate more Money
Getting more money is easier said than done, but try tapping into any savings you have if necessary. Avoid using credit cards if possible, but a short-term cash advance loan might help. Consider asking a friend or family member for a personal loan until you can get back on your feet. If you have to, borrow from your retirement or 401k plan to help get you out of the situation. You will face a tax penalty for early withdrawal, but this can be minimal compared to not having financial security. You may also find short term lending alternatives online that can help in a quick pinch. Understand interest rates are higher, but the money can come in handy if your vehicle does not run or a major expense needs to be paid now.
Utilize assistance and other valuable resources
Look into available assistance programs for housing, food, finding a job, unemployment, health insurance, or even clothing. You might qualify for state or federal benefits. Some areas also offer job training and classes to help get you back into the workforce as soon as possible.
Learn to prevent it and forecast your financial future with a plan
Establish an emergency fund to prevent this from happening again, even if it’s only by saving a few dollars a week. Try to have adequate health, auto, and home insurance to cover pricey unexpected expenses . Having a plan established ahead of time eliminates some of the stress of the situation.
