How to Deal with a Financial Emergency

Whether it’s an emergency home repair, an unexpected bill, medical expenses, or a job loss, dealing with a financial emergency can be an incredibly stressful time.  You still need to put food on the table, you still need to pay your utility bills, and you still need to pay your rent or mortgage.  Luckily, there are options available to you, and we are going to discuss some of them in this article.

Evaluate Your Situation

The first thing you need to do is evaluate your situation.  If you start to panic, it won’t help you at all and will only lead to additional stress.  It’s understandable that you’re worried, but you need to stay cool, calm and collected in order to find a solution.  So, first take a look at what caused this financial emergency.  Was it a natural disaster?  Have you got mounting expenses and debts that you can’t keep on top of?  Have you had a sudden loss of income?  Understanding the reason for your financial emergency will help you to make a long term plan.

Prioritize Your Expenses

Next, you need to prioritize your expenses.  There are certain bills that you won’t be able to ignore, such as your rent or mortgage, and your utilities.  However, there are some things that you may be able to do without until your situation is under control, such as your cable bill or a premium cell phone plan.  Once you have established which expenses are important, you can take steps to cut the others, freeing up money in the process.

Negotiate with Lenders

If your financial emergency has been caused by spiraling debt or a medical bill, it’s a good idea to negotiate with your lenders.  Most, if not all, would prefer that you do this as opposed to just ignoring their payment reminders.  It is in your lenders’ best interests to ensure that you still continue to make payments after all.  You may be able to get a lower interest rate, freeze your payments for a while, or restructure your loans.  Where possible, though, take this step before the threatening letters start arriving.

Obtain Some Extra Money

Ideally, we would all like to have an emergency fund in place to help deal with financial emergencies, but this is not always possible.  So, your next step should be to obtain some extra money.  Maybe this could involve taking on a second job or selling some of your assets.  Alternatively, you could reach out to a structured settlement company and obtain an emergency cash payment to see you through.  It’s also worth checking to see if you have any money you can withdraw from an investment or retirement account.  Friends and family may also be willing to help if you ask.

Hopefully these tips will help you get through the financial emergency that you are currently facing.  If they do, it’s a good idea to set up an emergency fund once you are back on your feet, so that next time something happens you will be covered.