The electricity bill is due, the car needs major repairs, your child has grown out of their school shoes and at the worst possible time, your fridge breaks down. If you are a low-income earner or have stretched yourself thin with financial commitments like a new mortgage, unexpected expenses can cause significant challenges to the weekly budget. What do you do next? Making the right decision can shape your financial future over the next few years, so it is vital to make wise choices for you and your family.
Avoid Bad Debt
Not all debt is created equal. Frequently, people panic when encountering a financial emergency, feeling as though they don’t have any options. They take on short term high interest loans or rack up credit card debt that they struggle to repay before the interest starts adding up. Fortunately, there are now payday loan alternatives. Plenty of financial organizations offer low interest loans with much more manageable repayment terms than a credit card or payday lender. Do some research before signing on the dotted line and you can minimize your overall monetary outlay significantly.
Reach Out for Emergency Assistance
There are community organizations and government assistance programs that can assist with everyday essentials like food, accommodation, and transport vouchers if you are really struggling to get through the week. They may also be able to offer part payment of water, gas, or electricity bills. These organizations are set up to help people in times of need so don’t be afraid to reach out. Have a look online to see what is available in your local area.
Talk to Your Service Providers
If your bills are piling up, your service providers may be able to provide a bill continuance or payment plan. It is always better to call them and talk through your options rather than let the reminders build up in your mailbox. They usually have processes in place to help people make their payments.
Minimize Your Spending While You Get Back on Your Feet
Try to only spend on the essentials while you get back on your feet. When you are doing your groceries, try to minimize your bill by researching cheap meal ideas. Try making pasta with a tomato-based sauce and bulking it out with vegetables or making a large potato or pasta bake. Minestrone soup and savory mince are also quite cost-effective options. When you are planning your meals, consider what fruit and vegetables are in season and the weekly supermarket specials to make sure you are getting the best deal that you can.
Create an Emergency Fund
Now is the time to start planning an emergency fund to help you next time the unexpected happens. Sit down and work out how much you can afford to set aside every week. Try to build up a minimum of three months of living expenses. The idea is that the next time your washing machine breaks down or your dog needs to go to the vet, you will have money in the bank and not need to take out a loan to bridge the gap. If your economic situation is complicated, it might be a smart investment to speak with a professional accountant about how to structure your finances in such a way as to enable you to save, while still meeting your costs.
When you find yourself strapped for cash, try not to panic. Plan carefully, budget accordingly and borrow mindfully and you will soon be back on your feet.