How Would You Handle a Personal Financial Crisis?
What would you do if suddenly you had little or no money coming in? How would you feed yourself and your family? Or pay your bills?
How would you handle an unexpected expense? Such as a vehicle or a major home appliance breaking down? And how could you pay for emergency medical treatment?
The easy answer to all these questions is dipping into your emergency fund. That’s what it’s there for.
But not everyone has been able to establish this type of fund. And some folks who had one depleted it during the COVID-19 crisis.
Pandemic took financial toll
The pandemic hit Americans hard. The number of new cases has dropped sharply lately and we’re all happy about that. But as of this writing, more than 33.6 million of us have tested positive for the coronavirus. And over 603,000 have died.
The Centers for Disease Control and Prevention estimates that actual coronavirus cases may be much higher.
Many Americans who got sick suffered financial losses. Even those who have been able to avoid infection have been negatively impacted by the virus.
Some have lost jobs, while others have lost their entire business. Some have had their work hours cut and income reduced.
Here are some things you can do to try to handle a personal financial crisis. Even if you don’t have an emergency fund built up.
Stop non-essential spending
The first thing to do when a financial emergency hits is stop all spending not crucial to your survival.
That might mean no dinners out and no restaurant carryout. Spending only what’s necessary at the grocery store and preparing all meals at home will take care of that.
The same with certain activities you planned. Like going shopping at the mall or taking in a movie at a theater. Maybe a vacation needs to be postponed. Perhaps you could get rid of your landline and cable subscription. And cancel a gym membership.
The key here is to separate your needs from your wants. Make a list of your necessities – food, water, medicine, hygiene supplies, etc. – and focus on them. The wants can wait. For now, stick to the needs.
Call your creditors
The second step to take after a financial emergency occurs is to contact companies to which you owe money.
This could be anything from a car loan to a credit card debt. You might be surprised at how willing companies are to work with you. Especially during the COVID-19 pandemic.
They’d rather get a little something from you each month than nothing. The worst thing you can do regarding debts is ignoring them. When those companies believe you’re blowing them off, they will do one of two things.
Either they will sell your debt to another company that might have more aggressive collection tactics. Or they might take legal action against you. Neither is good.
Sell your surplus
Third, determine what you can sell. If you and your spouse or roommate have two cars but could survive on one, consider selling one of them.
Perhaps you have extra furniture you rarely use. Check your basement and garage for any items that could bring in cash.
A garage or yard sale may be the perfect way to unload some of these things that are taking up space.
Smaller items that can be shipped easier and less expensively could be sold over the Internet. Such as clothes you never wear and books you’ve already read.
Pursue new income
A fourth strategy for handling a monetary setback is discovering a new source of income.
How you do this will depend on a number of factors. Including your health and mobility. Or your technological savvy.
There are many work-at-home opportunities out there. But you need to be careful because a number of them are scams.
Perhaps you can get part-time work at a local store. Or use your business expertise to become a consultant. Or utilize your skill set to provide a service. Or launch a home-based business.
Beg, borrow… but don’t steal
A fifth way to deal with a financial crisis is borrowing money from family or a close friend.
Ideally, this would be a family member. Being unable to pay back a loan in a timely manner to a friend could destroy the friendship.
Everyone’s family situation is different. Some people will gladly reach out to help, no questions asked.
Others might make you grovel or will just refuse outright. So this might not be a viable option for some. But if it is, it’s a quick way to get some much-needed cash. And hopefully you’ll be in a position to help another family member some day.
Seek out free stuff
Sixth, replace costly entertainment with free activities. A long walk around the neighborhood is a free and healthy way to spend an hour.
Check out your local library. It may host free events, speakers and group meetings. Your taxes pay for this, so get involved and find out how you can benefit.
Many local events were cancelled or postponed due to COVID-19. But some are opening up again. Including free outdoor concerts.
Select a hobby you enjoy and spend time improving your skills. You may grow your hobby to a point where you could even make a few extra dollars. Such as photography, flower arranging, cake decorating, etc.
Hone in on your home
A seventh and final way to deal with a financial crunch is to rely on things you already have in your home.
Many people could feed themselves and family members for a week or more. Just on what they have in their freezer and pantry.
When a piece of furniture or a small kitchen appliance stops working, try to fix it rather than replace it. There’s plenty of information online that can help.
If you have to buy a replacement, look for second-hand options. That toaster you get at a garage sale won’t be as shiny as a new one. But it might work just as well.
Build a food stockpile
One of the things you hopefully already have in your home is a supply of survival food.
If you don’t currently have a supply of survival food, this could be the perfect opportunity to acquire some. Especially since 4Patriots is offering a buy one, get one free deal on Emergency Food Bar Kits.
These Bars are good for 5 years, and built to withstand extreme temperatures. Keep them in your car, home, RV, bug-out bag, or anywhere.