7 Things You Can Do In a Personal Finance Crisis
February 8, 2008 by Miranda Marquit
Filed under Finance
Sometimes bad things happen. Even to good people. And sometimes these bad things involve your personal finance situation. So, what do you do? Here are 7 things you can do in a personal finance crisis:
- Remain calm. One of the first rules of crisis management is to avoid panicking. You will get through this personal finance crisis. But you need to take a few calming breaths and get ready to meet the challenge head-on.
- Call your creditors. Most creditors have programs set up to deal with personal finance crisis. If you contact them immediately, and explain the situation, most will put you on a reduced payment plan or come with some other solution while you get through the trouble.
- Say good-bye to unnecessary monthly expenses. Every household has “extras.” During your personal finance crisis, you need to cut back. Monthly subscriptions to music and video services, and even premium cable channels (maybe cable altogether) should be stopped. How often are you eating out? Look at your personal finance situation honestly. Cut out the things you don’t need.
- Downgrade the necessary expenses. This can also be a big help. You may have to eat generic-brand food for a while. If you have an expensive lease, return it to the dealer and ask if you can transfer to a less expensive lease. Cut back on the cell phone plan and find ways to lower bills such as heating and electricity.
- Sell assets. If you have some unnecessary, yet fully owned assets, now is the time to sell. Artwork and fine jewelry fall into this category. You can even sell some of your less valuable items that are unnecessary. For the rest, if you have to, a yard sale may be necessary. Don’t sell your house, though, unless you absolutely have to, or if it was too big for your budget in the first place.
- Get help from friends and family. Let your family and friends know that you are in trouble. True friends and family will help you out by buying groceries or a gas card on occasion, or even offering other types of help. Avoid loans from friends and family, as these can strain a relationship.
- Find something to help channel your frustrations. Many people, when faced with a personal finance crisis, despair and end up making things worse by spending more money. Instead of going on a shopping spree or eating out more, take up a hobby or exercise. You want whatever you pick to be free or very low cost.
Many of the things on this list will keep you out of trouble if they are done before there is a problem.
So true, Cameron! Living within your means regularly is a good way to stay out of trouble in the first place.
But sometimes devastating surprises (such as medical and natural catastrophes) afflict even the most conscientious of us.
I’ve been through several personal finance crises and the most helpful has been “get help from friends and family.” The most helpful sector in “friends” has been the old school tie network for job prospects and bridge financing to tide you over.
Great point Ren! It is a good idea to build good relationships that you can call on in need. Of course, it also means that you should be there for others as well.
Last but not least, remember the how you feel about the crisis, remember the pains that you get from it and remind yourself that you are not going to have it again anymore…
This will prevent the crisis to happen again and I believe prevention is the best!
Prevention is indeed a big key! And when you make a mistake, it is important to learn from it.