Have you had to spend some of your emergency fund? Financial setbacks come in all shapes and sizes. It can be anything from an expensive household repair to major car trouble. It's impossible to plan for every financial hit you will take in your lifetime.
The question is: What are you going to do about it?
- Don’t panic: Panic is the first reaction many people have when experiencing a financial setback. Keeping calm will allow you to think more clearly and resolve your deficit quicker.
- Crunch the numbers: Problems won’t disappear when they’re ignored, especially not money problems. Sit down and figure out exactly how much more money you’ll need in order to cover your new expense, or to fill the gap of an income loss.
- Work twice as hard: When you’re dealing with a financial setback, you’re looking at less money than you need to get you through the month. The only way to stretch what you have to fit your needs is to earn more or to spend less.
- Trim your spending: Before cutting your budget in half, though, take the time to prioritize. List all the expenses you cannot do without and the ones that would be irresponsible to neglect.
- Contact your creditors: If you absolutely cannot make some of your minimum monthly payments anymore, contact your creditors before they come calling on you. It’s always best to be up front about your financial situation.
- Reach out to family and friends: The people who care about us most are the ones who can get us through anything. Don’t be embarrassed to tell your family and friends what’s going on. They’ll support you and encourage you.
- Be proactive: Hindsight is always 20/20. Harness the urgency you feel now to get into the habit of building up an emergency fund. As soon as you’re back on your feet, start putting away money that can be pulled out in future setbacks.