Your household has just had a financial crisis. Maybe somebody lost their job to a downsizing at their company. Maybe the landlord raised the rent. Was there an unexpected medical emergency? Whatever the crisis was, people tend to go into a stressed-out mode which makes clear-thinking almost an impossible task.
Expected or Unexpected
Expected – If you lost your job, there would have been warning signs. People being laid off, or made redundant, is a sure sign that it might happen to you. In that case, by actively looking for other work with a different company, you could have found a new job and left the existing company of your own accord.
Whether it’s a mortgage or a rent increase, you would have received information about that at least a month in advance, as per the law. In that case, a person should have made arrangements to have more money set aside to pay the extra few dollars.
Unexpected – A member of the family has a vehicle accident or an accident at home or work and they are incapacitated and racked up some horrendous hospital bills. If you have saved for a rainy day, then this is what you saved for.
Expected and unexpected – A vehicle breakdown can be both expected or unexpected depending on your car maintenance plan. If you don’t maintain your car, then expect it to eventually stop working. A breakdown is unexpected, and that may mean you are short of cash in a time of need.
1. Don’t Let Your Emotions Rule
The first step if something like this happens is to take it slow. You are not likely to think things through in a logical way if your stress levels are way over the top. Getting your emotions under control is important to help you get your finances under control.
Is there somebody you can talk to, perhaps a friend or member of the family who can be on the outside looking in and see things more clearly. There are also professional financial advisors who understand how to handle debt and can provide relevant advice. Ask around for recommendations if you want to chat with somebody in that profession.
2. Assessment of your Situation
Do you know your exact financial situation and where you stand? How much savings do you have? Do you actually have any? What are your monthly bills? Include everything in your assessment.
- How much debt do you have such as loans and credit cards?
- What are the interest rates on each card and loan?
Write Everything Down
Write all this down or enter it into a spreadsheet if you are okay with a computer. For example, in the first column, you could put the different categories such as the groceries, eating out, electricity, rent or mortgage, etc. In the second column put the date, and now, you can keep track of all your expenditure in the future.
Add another column for the dates that all the bills are due to be paid. The last thing you want to be paying is late payment fees or penalties if you can possibly avoid it.
Do Not Panic
Don’t underestimate just how helpful this can be. Call it a reality check. You will get an idea of what looks bad, what looks really bad, and what looks better than you first expected. By doing this, putting all that data together into an easily readable and understandable list can make you feel better and will certainly make you feel more capable of dealing with the financial crisis.
3. Brainstorm Ways to make Money
Spending carefully will definitely free up more money for your needs. Starbucks for coffee is out, make a coffee and drink it at home. Make sandwiches and a drink to take with you to work. Avoid places in which you have a tendency to spend money. For example, bookstores, shopping malls, computer shops and clothing stores. Because you buy food you can’t stay out of the grocery supermarket but you can make a list and stick to it and be as frugal as you can.
Enlist the Kids
If you have kids at home, young or teenagers, tell them that you are living to take care of basics for a while. You will be doing them a favor by helping them to get a better understanding of money and saving yourself any future arguments about why you are not buying them more clothes or toys for a while. They might even have some ideas themselves on how to save or earn money.
Earning and Making Extra money
If you want to bring in more money there are many options. A big clean-up of possessions for a yard sale or these days an online sale is okay as well. Other options include babysitting or dog walking. Are you good on computers and can show others how to do things?
Check the job market online or in local papers and see if there are jobs that you think you can do. Visiting local businesses is another option. Ask if they need anybody or will they be hiring. Make sure you dress appropriately. There are part-time positions available and you never know unless you ask. If you are a stay-at-home mother then work out the figures and calculate whether you can get a full-time job or make enough money so somebody else can take care of your children. There are quite a few stay-at-home mums who have found work online, but these jobs need to be investigated thoroughly before you invest funds.
Borrowing from Friends and Family
Should there be really no other options, then borrowing from friends and family for essentials might be necessary. In that case, make sure you work out a repayment plan. And don’t be too proud to ask for help. When a financial crisis hits, people tend to rally around and do as much as they can if they are in a position to help.