Managing Your Finances During a Crisis
All tsunamis, hurricanes and medical atrocities aside, there’s more to crisis proofing deadly and financial catastrophes. In the realm of protecting one’s family from the devastation of financial dire straits, a simple plan starts with a budget. If only the American family learned to spend significantly less of their income, financial crises would almost become extinct.
The formula for financial solace is to reduce the outgoing budget to be applied to a savings account or market fund. The 30+ million Americans ensconced in debt could lower their stress rates and genuinely enjoy life if they put an end to over extending finances. Living from month to month impairs the quality of life issue.
Being financially devastated can be a paralyzing situation. Despite an adequate salary and a dependable job, families across the United States continue to be challenged by making their means last from month to month.
Pre-Crisis Financial Planning
Starting a savings account or plan features a surefire way to be prepared for unforeseen costly emergencies. It could be anything from a malfunctioning boiler or a household flood. In lieu of the family crisis, being prepared financially can cushion the devastation of the event. Nevertheless, learning new spending habits may be challenging for a compulsive spender. Keeping up with the Joneses is not worth the superficiality of terminal financial distress.
Obviously, there are only two solutions to the spending deficit equation; either:
- Increase one’s salary significantly
- Start living below your financial means drastically.
Unfortunately, not everyone is able to achieve either objective. In fact, for many consumers they require both goals to the spending objective, start making more and stop spending until they can see their w ay out of the red. As the old adage, “The more you make, the more you want” is true. But the problem grows when people begin to spend more than they make.
The end result is a financial avalanche. Even if you think that you have the rob Peter to pay Paul down pat, it’s only a matter of time before everything could snowball. The reality is that the only financial rescue team available to you may be a personal loan or debt consolidation loan.
To prevent the dominoes’ effect of financial stress take over here are a few steps to quell your finances in the right direction:
- Compile a list of current bills
- Devise a list of household operations
- Review areas to cut spending (ordering out, entertainment, shopping sprees, etc)
- Develop a balanced budget to live on only 60 percent of your household income
- Sell any personal commodities that are beyond one’s financial means.
- Get organized on your PC with either a Quicken or Microsoft program.
- Work to balance your budget by paying of bills
- Detail a goal with realistic terms
- Stock between five and ten percent a month into a savings account or a money market account on a regular basis.
Fast Debt Solution
Since the idea of taking on a second job is an unpopular choice for most people, a rapid debt solution is a debt consolidation loan. Since the loan is designed to pay-off current debt and stretch out the repayment term over time, it can be the ultimate debt solution for managing one’s finances.
Financial Crisis Savers
Personal loans are either secured or unsecured loans. Secured loans place the borrower’s property up for collateral. (For example, a house, real estate property or a high end recreational vehicle). An unsecured loan usually has a higher interest rate. Since the financial institution is at greater risk of a defaulted loan for a person with poor credit, the fees are reflected in the interest rate.
Pretty straightforward, debt consolidation loans – repay all current bills. Then the loan charges the borrower an interest and monthly charge. For its overall convenience and ease is considered an immediate way of quelling financial stress.
For the type of emergency, where one needs less than a thousand dollars, a payday loan is just the remedy. The best way to outsmart a payday loan is by paying the loan immediately and avoiding going with a plan that has a pre-payment penalty.
During a family or financial crisis it’s comforting to know that financial squadrons otherwise known as debt consolidation, personal loans or even payday loans may be the option for a monetary rescue.
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About The Author
Holly Bentz is a finance writer and a contributor to About Personal Loans.