Financial Crisis Help


“If you are going through hell, keep going”
-Winston Churchill

Here are my top financial crisis help tips:

1. Evaluate your current financial situation and apply immediately for unemployment.
Sit down with all of your bills and make an inventory of your recurring expenses, who you owe and how much. Have you been living paycheck to paycheck? Do you have cash reserves? How much? How long can you pay your mortgage or rent without being foreclosed on or evicted? The inventory will give you an idea of how much time you have. How much money do you need to keep your roof over your head at an absolute minimum? Write all of this down.

2. Stop spending now on EVERYTHING
Take a quick inventory of the food you already have in the house. Would it be possible to last for a while with the foodstuffs you already have? Could you make some things last longer?

Your goal here is to cut everything as low as you can to conserve your cash on hand. Stop buying milk and things that spoil quickly. This likely won’t be the healthiest time in your life, but being frugal now can save you from homelessness in a few months.

3. Cut your recurring monthly expenses down as much as you can.
Cancel or put on hold all subscription services, cable, extra telephone services, and magazine subscriptions. Try to conserve energy and water at home more than usual.

4. Cut out unnecessary driving trips and combine necessary trips.
Start walking or biking as much as you can to save gas and maintenance on the car.

5. Evaluate your living situation.
Could you get roommates? Could you move back in with your parents temporarily? Look for things you can do to bring down your living expenses using any means necessary. Remember, this is only temporary. The more flexible you are now, the easier it will be to get out of the hole later when the hemorrhaging subsides.

Check to see if your pets might be holding you back from finding somewhere cheaper to live. Pets can make it very difficult to move somewhere cheaper, and people are a lot less willing to take you in if you have to bring four dogs. I know that you love your pets, but is there something you can do temporarily like have an understanding friend or parent watch them?

6. Search for a stop-gap temporary job.
Did you wait tables in college? Could you go to the cafe down the street and apply?

Even if you’ve never waited tables but think you could convince someone to let you try, quickly make a resume that would apply to food service and take it to every restaurant in town. I say restaurant because you can make more money waiting tables part time than in lots of entry level full time jobs.

Restaurant hours are often very flexible, and if you work this correctly, you’ll have enough time to look for another more permanent position in your field while you are paying the bills. Even if you only get 20 hours a week, it will be better than nothing. Most restaurant managers can be talked into letting a newbie try waiting tables, especially if you are enthusiastic and interview well.

7. Spend your time looking for a new job wisely.
This is not the time to attach yourself to your couch and start eating bon-bons out of depression. I understand that things are tough and you feel bad about it, but the sooner you get out there, the sooner things can change.

8. Look for things to sell or barter with.
Ebay is a great way to get rid of excess stuff that still has value. If you have nice clothes, look for stores that buy used clothes. If your clothes aren’t sale able but still in good condition, gather these up, inventory them and donate to the goodwill. Get and save your receipt with the written inventory. This way, if you have to move, you’ve already been proactive at bringing your possessions to an absolute minimum. Sell your books at a used book store. Any cash you can gather up right now will make a difference.

9. Pay only the minimum payments on your credit cards.
A financial crisis is the ONLY time you’ll see me promote minimum payments as an acceptable strategy to managing your financial life. Make sure to go back to paying off your balance every month or at least paying a sizable chunk to your debt once the financial crisis is over.

10. Do NOT raid your retirement accounts.
Pretend that they don’t exist. Killing your retirement now because of a temporary setback will cause you a lot of pain later when you have to start all over again.

11. Avoid accruing new debts of any kind.
Do not take out an equity line of credit on your house or ramp up on credit card debt. If you have to charge things, wait as long as you possibly can. Even a few weeks might make a difference when the credit card bills come due. Guard your cash reserves, but do not run out of cash and start charging everything. The added debt will only make the problem worse.

12. Call your creditors and tell them about your situation.
Most will work with you in some way. Make it clear that you want to pay them but right now you have fallen on hard times. If you make any agreements about deferred payments, make sure you honor them. The last thing you need right now is to put your credit in the toilet for five to seven years because of a temporary setback.

13. If you are thinking about declaring bankruptcy, wait wait wait.
Make sure the hemorrhaging is over and your financial situation is stable before you even consider this option. Otherwise, you’ll have declared bankruptcy before the underlying problem (no income) is solved, and you’ll be right back to accruing debt with no way to pay it off.

The most important way you can help yourself in a financial crisis is to not panic.

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