During your lifetime, there are all sorts of occasions when a financial emergency could arise and you need to deal with it quickly. It could be that you lose your main source of income, you are hit by an unexpected bill or economic conditions put your business in danger. Whatever the case, you need to make sure that you bounce back and get back on track financially at the earliest possible opportunity. So, in this blog post, we are going to be running through just a few of the best ways that you can respond to the challenging situation that you find yourself in.
Evaluate the Situation
Even though you may have to deal with this situation quickly, this doesn’t mean that you should be acting without thought. Determine exactly how your financial situation has been affected and a few possible responses that you could put into action. It can help you out a great deal to write all of these down as this helps to sort through the jumble that you have in your head. Work out any deadlines that you need to hit so you have an idea of the timeframe that you are working to. If you have a partner or a friend or family member who you can trust, it can provide you with a major helping hand to talk with them to establish your next course of action. This can also help to relieve some of the stress that you are feeling.
Prioritize Your Expenses
Some essentials come under the category of essentials, whereas others can be classed as nonessentials. It is the first category that you need to prioritize, while cutting back significantly on the latter one. Obviously, food and lodgings need to be at the top of the list of essentials, alongside any necessary bills which you have to take care of. You may be able to start cutting back on your expenses by cancelling any unnecessary subscriptions which are taking your money on a monthly basis. Eating and drinking in the house rather than going out will help you to save significant sums of cash.
Negotiate with Lenders
You may find that there are all sorts of bills that you have to deal with from credit card companies, mortgages etc. It is in their interest as well as yours that you pay them back, so make sure to get in on the phone to them as you may be able to negotiate a better deal while you get back on your feet. This could involved lower repayments or a lower rate of interest. Deal with these things before the angry letters start coming through the post, and you will give yourself maximum time and you are also likely to get more goodwill from the companies.
Get Access to Cash
There are a number of different ways that you are going to be able to get the cash that you are looking for to deal with the situation. Obviously, the best solution is to dip into your emergency fund if you have one. If you are reading this article and wondering whether or not to set up an emergency fund, go for it! Ideally, you want to have three to six months’ worth of expenses set aside to give yourself peace of mind.
Of course, another way to get quick access to cash is through loans or credit cards. However, you need to be prepared to deal with the interest repayments further down the line. You don’t want to put yourself into a financial downward spiral. Another option is to consult with friends or family members to find out if they are able to help you out in any way. Alternatively, perhaps you have some investments that you can draw money from.
As for earning extra cash, you could look to sell your things online or utilize the sharing economy in another way. There are also plenty of other ways that you can make money online these days, so it is certainly worth looking into these in more detail.
Take Advantage of Any Available Assistance
If you have lost your job, you usually have access to some means of income support that will help you while you are looking for work. If you got into an accident at work, you could look into the different legal support that you can receive such as injury lawyers like David Resnick y Asociados. There may also be community support schemes which are designed to help people get back on their feet when they are down.
Plan for the Next Financial Emergency
After you have been through a financial emergency, you start to realize just how important it is to be prepared for the next one. We already mentioned it earlier on, but the first thing that you need is an emergency fund which you can draw on. Even just having money to last you for a month or two can give you the breathing space that you require to get back on track. You may also want to consider getting yourself some better insurance to deal with a range of different situations. If you are still in debt of any kind, now is the time to start tackling it. If you have a clear plan of action in place before the financial emergency hits, this helps to give you peace of mind and a sense of security for the future.
To recap, the first thing that you need to do before a financial emergency is to evaluate the situation to assess all the different courses of action available to you. Prioritize your expenses so that you are only dealing with the most important ones. Next up, negotiate with your lenders to make the best of the situation. Look at the different ways that you can get access to the cash that you require, take advantage of any assistance which is available to you, and start planning for the next financial emergency which may come your way.