02 May How to Cope With Financial Emergencies

How to Cope With Financial Emergencies

As we all know, life can be full of surprising twists and turns. For many of us, financial surprises are often negative and difficult to deal with. This article will outline the typical financial emergencies in our lives and how we can cope with them.

There are a number of reasons for financial difficulties, including:

  • Poor money management (overspending, compulsive buying, purchasing things we can’t afford)
  • Loss of income (job loss, divorce, death)
  • Emergency and/or unexpected expenses (car repair, house repair, medical expenses, etc.)
  • Fraudulent use of your credit card or other accounts – identity theft

All of the items listed above, with the exception of poor money management, may not always be within our control. Therefore, we always need to be as prepared as possible to deal with the unexpected.

So how can we put the pieces back together and hopefully keep our credit intact? How can we cope during periods of financial difficulty? Communication and early intervention are the keys to helping you cope with a financial crisis. Here are some tips to help you get through a difficult time and keep your credit intact:

  • Call your lender or creditor, explain your situation, and work with them. Creditors always respond better to a consumer who reaches out to them, rather than a consumer who avoids them. By contacting them, you can make payment arrangements or restructure the debt. Never ignore communications from your lender or creditor.
  • Seek Help. Find a HUD-approved housing counseling agency or other reputable firm in your area that offers credit counseling services. (Note – Beware of “quick fix” and/or “credit repair companies” that may use deceptive methods to falsely improve your credit. Unless there is a true mistake on your credit report, these companies can do little to help but will charge you just the same.
  • Don’t make promises you can’t keep. Be realistic about what you can afford to pay and when.
  • Be honest and don’t give up. If you tell the truth to your creditors, you’ll ensure a good relationship and positive resolution.
  • Rebuild your credit. A credit counselor can provide confidential spending plan and debt information, debt repayment programs, and financial management education. Look in your community for available resources.
  • Pay yourself first. Put yourself on “the payroll.” Always try to set aside money for savings.

When financial difficulties arise, we can all feel overwhelmed and unsure of what to do next. The key is to remain calm and to thing realistically about what our options are, create a plan to move forward and execute that plan. Only then can we truly survive and come through to the other side with our financial lives still intact.

 

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