Temporary financial hardships can hit anyone at any time. Sudden illness, reduced income, or an emergency expense can leave your bank balance low and your financial anxiety high. But you can overcome a financial setback with some serious budgeting and these helpful tips.
Rework Your Budget
Now is the time to plan a bare bones budget that eliminates almost all discretionary spending. Focus on essentials only: housing, food, transportation and bills. Be ruthless about cost cutting. For example, if you have multiple streaming services, cut it down to the one you most often. If you pay for a monthly gym membership, cancel it, and commit to exercising at home using fitness videos. Remember, these are temporary measures to help you regain financial stability. As things improve, you can slowly resume discretionary spending.
If you’ve been setting aside funds for a vacation or other special event, divert those funds toward paying for essentials. You can get back to setting money aside when your financial situation improves.
Communicate with Creditors
If you know you won’t be able to make your rent, mortgage payment, car payment or credit card payments, contact your landlord, mortgage lender and other creditors right away. Being proactive helps ensure you have the most options available for possible reduced or deferred payments.
Sell Your Stuff
Whether you hold an everything-must-go yard sale or offer items one-by-one online, selling gently used items you no longer need, or use is an easy way to make some quick cash to help you through hard times. Go through your closets, attic, garage and storage shed and look for things you or the kids have outgrown. Unused sports equipment, toys, games, gardening tools and household items are all good sellers.
If you think you might have something that’s a valuable collectible, do some quick research to ensure you price it accordingly.
Turn to the Gig Economy
If you’ve lost your job, you may consider gig work for extra income. Look into driving for Uber or Lyft, doing food delivery for DoorDash or GrubHub or putting your marketable skills to use on Fiverr or Upwork. Freelance and gig work can be helpful solutions to temporary financial hardships.
Eat What You Have
Chances are you have plenty of food in your pantry and freezer that you haven’t prepared yet. Putting together meals from food you already have helps stretch limited finances and shrinks your food budget.
Explore Credit Hardship Plans
Working on credit card debt can be extra stressful when facing a sudden loss in income. In this instance, call your creditors to ask about hardship plans, which temporarily lower interest rates and credit limits while waiving fees. This allows payments to apply to the principal. Generally, these plans last three months, and interest rates may go back to normal immediately or rise over time afterward.
For a longer-term solution to credit card, talk with a certified credit counselor. They can help you find the right solution to pay off your debt, and help you plan a realistic budget based on your current finances.
