Important Tips to Deal with a Financial Emergency
There are times when life throws us a curve ball. It could be anything – a sudden job loss, sudden and astronomical medical bills, a natural disaster, emergency home repairs, and so on. The impact of any and all of these situations on your finances can be disastrous. Despite this catastrophe, you still need to pay your bills and put food on the table. So how do you cope when you’re faced with a financial emergency?
Take a Step Back and Assess the Situation
The first thing we need to do in the event of a financial emergency is to not panic and assess the situation. And then try and figure out why it happened. You need to know whether this situation is going to be permanent or temporary. This will affect the kind of strategy you will need to adopt.
List out and prioritize your expenses
So you had a financial emergency. You still have a limited amount of money with which you can work. So sit down and list out all your expenses. And then prioritize them in order of importance. Food and shelter should obviously be at the top of that list. These need to be paid for, no matter what.
Things like cable bills are not necessary for survival. From the list, remove all those expenses that are unnecessary. Do you really need a landline as well as cell phone? Can you do with a less expensive phone? Do you really need to keep those premium cable subscriptions? Do you need to eat out or order in so regularly? One thing people don’t realize is how much money can be saved by buying fresh groceries and cooking and eating at home. Even a small cost saving can add up and be used to pay off bills that are pending.
Begin negotiations with your lenders
You need to call your lenders in the event of a financial emergency. You would be surprised at how accommodating they can be. After, it will be in their best interest for you to pay back your loans. Most of the time, they would be willing to lower your interest rates or even extent your terms of repayment.
Remember one thing – if you wait till you become seriously delinquent before you contact your lenders, they will not be willing to listen to your reasons. However, if you call them as soon as you have had a financial emergency, they will be more accommodating towards you.
Ask for Help
Here is a list of links where you can get assistance if you have had a financial emergency and are struggling to make ends meet because of this:
Government Assistance Programs
- Low Income Home Energy Assistance Program – to help pay your energy bills till you are stable again
- Housing Finance Agencies List – to give you emergency rent assistance or help you find affordable housing
- gov – a state-wise directory of government funded assistance programs
- Unemployment Benefits – a list of assistance programs for the unemployed
Non Profit Organizations
- Modest Needs – can provide short term assistance
- Health Well Foundation – to help with medical finances
- Free Gas USA – helps people with gasoline grants
There are many more such organizations that can offer assistance in the short term. However, you need to remember that you may not qualify for these assistance programs. They have really stringent criteria to ensure that they are not taken advantage of.
Preparing for the Next Financial Emergency
Planning doesn’t stop at getting out of a financial emergency. You need to think about how never to get into that situation again. And that means preparing yourself for the next financial emergency. And this means building a financial emergency fund. You should target having at least 6 months’ wages worth of savings at any given point in time.
Events that suddenly require a large amount of money are a part and parcel of life. If we prepare for these events, then we can completely avoid having a financial emergency.