Whether you’re hoping to buy a home in the near future or you’ve been a homeowner for 20 years, a time will likely come when you have financial challenges to deal with.
Whether you’re hoping to buy a home in the near future or you’ve been a homeowner for 20 years, a time will likely come when you have financial challenges to deal with. You may lose a job, rack up medical bills or simply find yourself stuck with an unexpected car repair bill or some other drain to your wallet. In life, there are ups and downs, so I want to talk about what you can do when your cash is tight and your money options seem limited.
Stay Calm. First of all, you don’t want to panic. When we are anxious, we don’t think clearly and it’s nearly impossible to come up with a solution when your brain is filled with worry and fear. Instead, take a deep breath and consider doing something that can ease your stress whether it’s exercise, meditation or spending some quality time with friends.
Revise Your Budget. When your income drops or changes, you need to figure out how much money is coming in and how much is going out. Hopefully you’ve had a budget all along, but if not, now is the time to create one that reflects the reality of your current financial situation. Be honest with yourself. Don’t tell yourself you only need $100 a month for food for a family of four. If you don’t know where your money is going, you can’t get in control of it.
Look for Ways to Cut Costs. When financial challenges occur, we must often make sacrifices. Are there expenses that you can cut, at least until you regain your financial footing? Look for ways to save money, such as cooking more instead of eating out, cutting out cable for a couple of months and putting off unnecessary trips to the mall.
Contact your Creditors. If the financial crisis is going to affect your ability to pay your mortgage or other bills, contact your creditors immediately. Your top priorities should be to prevent foreclosure and protect your credit score. Let your creditors know what’s going on in your life. Often banks will work with you if there is a crisis. For example, they may allow you to set up a different payment plan for this challenging time. Sometimes credit card companies will let you take a temporary break from making payments if there is a legitimate emergency. The only way you’ll know your options is if you explain your situation to your creditors as soon as possible. If your lender offers mortgage help or foreclosure help, be ready to take them up on it.
Seek Financial Counseling. When times get tough, it’s easy to feel like you’re all alone and have limited options. But that can’t be further from the truth. The reality is there are plenty of resources available to help you to recover financially. A HUD-approved financial counseling agency is one of the greatest resources you can tap. A coach or counselor can help you to revise your budget, look objectively at your finances and let you know about options you may not be aware of. A counselor can also help you to work out an arrangement with your mortgage lender or other creditors.
The key to success is information. By staying positive and being informed about your options, you can turn a financial crisis around and rebuild your life.