When you find yourself facing a financial emergency, be it unemployment or unexpected medical bills, there is only so much you can do in the moment. Life goes on, which means you still need to keep a roof over your head and feed your family. Although these moments can be filled with unmatched anxiety and fear, you can make it through with some strategic planning. Follow these tips to get through the initial hurdle of a financial emergency, or keep them in mind to prepare if you ever find yourself struggling in the future.
Cut Out Your Non-Essentials
When you experience a sudden job loss or other financial crisis, you have to prioritize. Your rent or mortgage should be at the top of the list, along with food, power and transportation. You should eliminate any unnecessary expenses that don’t immediately help you overcome your financial problem. This means not eating out, cancelling any subscriptions and focusing on preserving as much of your income as possible.
This does not mean you should immediately cut out everything, however. There are modern conveniences we can live without, but eliminating them entirely can be difficult. Without any form of recreation or reprieve, you’ll likely struggle more to overcome your financial emergency. Consider cutbacks before cancellations. For example, downgrading your premium streaming subscription to a standard package can save you 40 to 60 percent of the original cost.
Contact Your Lenders
Whether it’s credit cards or the cable bill, you should contact your lenders as soon as you run into trouble. Some people believe that skipping payments is their only option, but there are options in place to help people who are in the midst of financial hardship. These companies only profit from customers paying their bills, which is why they offer financial assistance in the form of reduced interest, cancelled late fees and extended deadlines. You may restructure your mortgage or get interest rates lowered on your credit card for a few months. The most important thing is to reach out as soon as possible. Making arrangements now will help prevent late fees, defaulting on loans and other economic disasters.
Get Extra Money
This may seem like a no-brainer, but people often panic when they face a financial emergency. Without any funds immediately available, they feel hopeless and are prone to making impulsive choices. If you don’t have an emergency fund, you could ask friends or family to borrow some money to help get you back on your feet. If you are only strapped for cash for a short period, a payday loan could help. Although they often have a bad reputation, payday loans can be lifesavers for those facing a financial crisis. Many come with high interest, but if you are facing one specific challenge and will be stable again within a paycheck or two, a payday loan could be a viable solution.
Seek Out Help
In addition to speaking with any lenders or collections agencies, look for other resources such as unemployment benefits and Medicaid. If you lost your job, you may be entitled for COBRA health insurance. Free credit counseling services can help you quickly construct a debt relief plan. Your local Community Action Agency (CAA) can provide access to important resources like food pantries, shelters, job training and childcare services. You may also consider signing up for a GoFundMe account.