According to the Bureau of Labor Statistics, the US saw a 9.5% unemployment rate during the most recent global recession. Excessive debt and lost income were two of the biggest contributors to a financial crisis.
Few Americans say they’re hopeful that they’ll be able to avoid a financial emergency if one were to arise. Most have experienced this phenomenon and know that it feels bad.
But how do you deal with a financial emergency and not suffer as many negative consequences? That’s what we’re here to answer. Keep reading for some tips and tricks to make it through.
Take Stock of Your Assets and Liabilities
Start by creating an inventory of everything you own, including property, livestock, vehicles, jewelry, antiques, and collectibles. Consider which of your total assets have the highest workable liquidity, such as savings accounts and other items that can be converted into cash. Estimate how much potential money you can get from all your assets in a given timeframe.
Look at your liabilities, such as mortgages, credit cards, student loans, and other debts. Once all this has been mapped, a plan of action can be established to pay down the most urgent liabilities first.
Securing an emergency fund from friends and family, or selling some of your assets to make ends meet, may also be necessary. Taking stock of your assets and liabilities helps to develop an informed strategy for navigating a financial emergency, ultimately getting you back on steady financial footing.
Identifying Financial Resources
The first step is to assess your needs. This includes providing food, keeping a roof over your head, and paying essential bills. It’s important to create a budget and see which expenses can be delayed.
Then it’s time to seek financial help. Many government and non-profit organizations offer an emergency grant or a fast loan that can help temporarily suspend the payment of medical, housing, or energy bills.
Private lenders such as payday loan companies can provide quick cash. Their interest rates can be exorbitant, so borrowers must use caution when agreeing to terms. Check out solidgroundfinancial.org, as they can help with consolidating loans.
Keep in mind that the best financial resource is always preparation. Building an emergency fund is the safest and most secure way to avoid a financial crisis in the first place.
Re-Assess Your Lifestyle Choices
Start by listing out all your expenses and ranking them from highest to lowest. This will help you determine which costs are non-essential and can be reduced during the emergency. Consider reducing or forgoing activities and purchases that can wait until the emergency has passed.
You may also need to reduce expenditures on things such as groceries and to eat out to better manage your budget. It is also important to look for ways to increase your income or find extra sources of income. You may be able to pick up extra hours at work or find a side job to supplement your current income.
If need be, you can look into government aid programs to help get through the emergency. Re-assessing your lifestyle choices can help to control expenses and make the most of your income during times of financial hardship.
Preparing for a Financial Emergency
Navigating a financial emergency can be a daunting task, but by following the steps outlined in this article, you can manage your finances and come out ahead. Take action today. Create a budget, assess your income, review your financial options, and then put a plan into action.
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