What Do You Do When Financial Hardships Hit

Tips to Conquer Financial Hardships

Living “paycheck to paycheck” is a fact of life for many families and emergency funds are non-existent. Too often, money does not stretch far enough. Then, emergencies happen: Unexpected bills and expenses can topple an already wobbly and unbalanced budget. What do you do when financial hardships are keeping you up at night?

That is the question we are going to conquer today as we offer you tips to help you stay afloat when you fear you are drowning in a sea of debt.

Related: Financial Planning: For Those Who Are at the Starting Line

Where to Begin When Financial Hardships Hit

The first thing to remember is not to panic and stay positive. If you are stressed and cannot seem to focus, you will have a harder time dealing with the situation. Take a few deep breaths, center yourself, and get ready to tackle the issue at hand.

Here is the first thing you want to do:

Make a list of all your expenses for the month. List every bill, the total, and the due date. Then, add groceries, gas, and anything else you will need to pay.

Now that you have your list of expenses, write down each paycheck you will receive during the month, and insert the mandatory expenses under them, based on the due date. For example:

The total expenses for that pay period come to $2400 yet your pay is only $2000, leaving you $400 in the hole. What do you do?

Medical expenses, electricity, insurance, and car payments are essential. Can you eliminate some of your cable expense? Perhaps buy a $15 antenna and get rid
of your cable service until you catch back up. If you are paying for medications monthly, look into getting a three-month supply at a time – it may cost more upfront, but will likely save you money in the long run.

Although no one wants to carry a balance on a credit card, you might need to do it for a few months. Contact your card carrier and ask for a lower interest rate. If you have good credit, you can apply for another card that could give you a promotional interest rate of 0% to transfer your balances. That will buy you some time and allow you to pay back as much as you can.

You may also be able to negotiate payment options with your mortgage holder, landlord, or other creditors. It is always worth a phone call to help give you peace of mind.

Eliminating Unnecessary Expenses

We are all guilty of spending money on unnecessary expenses from time to time. That harmless $3 cup of coffee can add up to almost $40 per month if you get it three times a week. Cutting the cable cord can easily save some families over $100 per month. Coloring one’s hair at home, spreading out time between manicures, pedicures, and haircuts can trim expenses a bit. Making pizza from scratch or using store-bought dough is often cheaper than buying it from a restaurant.

Sometimes it takes a close look at your expenditures to see where extra funds are going. Cutting back on some expenses that you enjoy may hurt temporarily, but if they can save you from financial hardship, it will be better in the long run.

What If There Are No Ways to Cut Expenses?

No matter what, do not ignore the situation. It will only get worse, and you will find it harder to get out from under the expense. Contact creditors as soon as possible, even before you miss the first payment. If it has already gone past that point, you still need to reach out to them. You may have options you never knew existed.

Related: Simple Ideas to Help You When You Face Financial Hardships

The worst-case scenario sometimes requires getting outside help. You may need to look into debt consolidation or even bankruptcy. Perhaps a family member can loan you the funds you need to get back on your feet. Some government programs are also available. If job loss is involved, unemployment benefits may help. Look into all options. Most of all – do not give up. There will be brighter days ahead even if you cannot see them now.

Source:

https://www.mymoneycoach.ca/blog/how-to-overcome-financial-problems-difficulties
https://bettermoneyhabits.bankofamerica.com/en/debt/how-to-overcome-financial-problems
https://www.thebalance.com/coping-financial-emergency-1289712

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This post originally appeared on our January/February 2020 Magazine