When faced with a money crisis, it is important to act quickly, yet deliberately. The suggestions below are designed to help you as you work to stabilize your financial situation.
Step 1: Prioritize your spending and set spending limits.
-Identify non-essential expenses and eliminate them. Cancel your cable, streaming and other subscriptions. Cancel gym memberships.
-Review your credit card statements for automatic payments and set it up for a minimum payment. For other automatic subscriptions or non-essential expenses, cancel the payments.
-Modify your phone(s) contracts(s).
-Decrease use of vehicles and consider carpooling.
-Eliminate eating out.
-Review childcare needs.
Step 2: Contact all lenders immediately even if you have not yet had a late payment. Let them know what’s going on and determine if they are willing to work with you. Remember to write down the name and contact of everyone you talk with and make notes about your conversation and its outcome.
-Let your mortgage company or landlord know that you’re in financial crisis. In the case of your mortgage, ask to someone in loan mitigation.
-Contact credit card companies and other lenders in writing to ask them to decrease or defer payment.
-Identify community resources.
-Locate local food pantries.
-Apply for SNAP (food stamp) benefits.
-Apply for assistance with utilities. Ask your utility company who might be able to help.
-Call 2-1-2, Tennessee’s community services help line. When you call, you’ll get a real person who is trained to help you sort out your needs and give you phone numbers of the nearest places where you can get help. You can also reach them at tn211.mycommunitypt.com.
Step 3: Identify and evaluate your resources. Generally speaking, you do not want to go into more debt in an attempt to pay your bills. Instead, think about what other resources you might have. As you do, consider the following:
-If you have an emergency fund, now is the time to use that money. You can rebuild your emergency fund at a later date once your income has stabilized.
-Get back any money that is due you. If you have loaned money to friends or family, now is the time to reach out to them and ask for repayment.
-Sell items that you no longer need. Consider selling larger items or items of value through online listings.
-Pick up a side job. If time allows, pick up some sort of side work that can help you earn extra cash during your money crunch. This does not have to last forever. You can always stop your side job once you are back on your feet financially.
Source: UT Extension
Christopher T. Sneed, Assistant Professor Ann A. Berry, Professor Department of Family and Consumer Sciences