If you are not currently experiencing a financial crisis, then count your blessings. At some point in your life you will face a money challenge that will have you stumped. Even with the best preparation — such as shoring up your emergency fund — that crisis may be too much for you to handle. Yet, being proactive can help you keep a bad problem from getting worse. The following is what you ought to know about surviving a financial crisis.
Review Your Cash Position
How much money do you need? Are the funds needed by a specific date or does the timeframe encompass a longer period? Knowing precisely when the money is needed can determine how and where you will get it.
Review your financial balances including your checking and savings accounts. These accounts represent liquid funds or money that you can tap immediately. It should also include cash on hand such as money that you have in your wallet, a purse or in a safe deposit box.
Understand Your Worth
If the financial crisis goes well beyond the ability of your cash position to cover it, then you will need to look at your assets. Your assets are defined as anything that you own including jewelry, a coin collection, your home or any other type of property.
Find out the value of your assets, because you may need to sell something to get out of the crisis. Work with appraisers to place a value on what you own. Prioritize what you will sell. For instance, if you would like to stay in your home, then one or more of your other assets will have to be sold.
Cut Back on Your Expenses
Every consumer has overhead. Overhead covers your living expenses such as your mortgage payments, your utility bills, insurance, credit card payments, food, clothing, entertainment, pet care and other expenses.
Consider how to reduce your costs. For instance, you may be able to do without a cable connection as you choose to watch your shows by way of the Internet instead. If you still maintain a landline, get rid of it. Use your cell phone exclusively to maintain contact with everyone. Switch to a lower-cost insurer, shop for food at a warehouse club and eliminate your entertainment expenses.
Work With Your Creditors
Your financial crisis may have something to do with your credit or it may be due to a loss of income. Either way, your creditors should be contacted. Inform them of your current financial plight and ask for a reduction in your interest rate.
A lower interest rate will not reduce your debt, but it will help you lower your monthly payments. With fewer dollars going to your creditors each month you will have more money to allocate elsewhere.
Contact Your Banker
Your biggest debt may be your home. If you prefer not to sell, then refinancing your mortgage may be your best option. Contact your current mortgage broker to find out your rate options. You may be able to refinance with no closing costs.
You should also explore your refinancing options with other companies. You may find a financing deal elsewhere that can save you a lot of money. Another way to save money is to finance your home for a lengthier time. Do what it takes to reduce your monthly housing costs.
Clear Out the Clutter
When it comes to assets you own a number of smaller cost items might also be sold. Scour your home and set aside those things you know that you can do without.
Hold a garage or yard sale in a bid to clear out the clutter and to raise some cash. Price your goods competitively and use those funds to battle your financial crisis. It may not be a lot of money, but it can come in handy.
Sell a Car, Take in a Boarder
There are other ways that you can battle this financial crisis. If you own an extra car, then sell it. If you own an expensive vehicle, consider selling it and buying an older model. Just make sure that the car you are getting is reliable — you don’t want to deal with repair costs on top of your other money problems.
If you have extra room in your home, then rent out a room. If you have extra room in your garage you can rent out that space as well. And if you are a small business owner with business space, consider how you might share that space with another proprietor.
Do What it Takes
You will find a way to get through this financial crisis. It may not be pretty and it most certainly will be painful, but it can teach you some valuable lessons along the way. You will get through this and you will come out of it a better person.