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12 Steps To Take To Deal With (or Prepared For) Any Financial Emergency

Okay, you have a financial emergency happening. You may have lost your job or half your income. You may be working fewer hours at home. You may have overspent on the holidays. You may not be able to pay your bills. You may be facing a repossession or a foreclosure. You may be facing a divorce or other significant life change. 

I have been faced with many of these scenarios. Life is not always easy even if you are prepared. Your finances may be good until something bad happens. You can have an emergency savings account and still have it wiped out faster than you can blink. 

Life happens and some things are out of our control. However, with a good deal of financial situations, you may have had an inkling this was coming. Not to sound unsympathetic, but I usually knew I was making some wrong financial decisions when I made them. I wasn't strict enough with my budget. I wasn't making at least an attempt on the payments. I wasn't talking to my creditors.

I have had some surprises too which is hard to deal with and overcome. I have had to swallow my pride more than once. I have had to sell some things off. I have had to borrow money. Life happens. You have more important things to worry about than your pride or pleasures. 

If you find yourself in these situations, you have to make some quick radical decisions very quickly. They are often hard decisions and will lead to some discomfort in your lifestyle. Your family may not be happy with you, but if you level with them, they may understand. 

12 Steps to Take to Deal With (or Prepare For) Any Financial Emergency

1. Shut It Down and Turn It Off. Before you even make a stricter budget, shut down and turn off any services you don't absolutely need to have. This can include streaming services, internet, delivery services, subscriptions, satellite or cable television, and more. Many of these are extras that you don't need to have anyway, but especially right now. You also need to look at your yearly subscriptions and shut off auto-pay on anything that renews annually. 

You may think that you can live without watching the game, but you can. You can live without a lot if you set your mind to it. This can be short term, but usually, you feel good after making these quick decisions to get money back into your checking account. 

2. Review all your expenses, your income, and set a realistic budget. Go over your bank account/credit card statements and review all your expenses and income. You can always slash your budget in some way, but you need to be realistic about your budget too. Groceries are important. Gas for your vehicles is important. Don't get too crazy about those categories, but find ways to spend less. 

3. Set up a debt snowball. This is a Dave Ramsey concept, but it totally makes sense. List your debts from smallest to largest and start knocking off the smallest debt. Once you have done that, you move that payment to the next debt and so on. This is pretty easy to do but will seem overwhelming at first. 

Now, if you have a creditor that is threatening foreclosure or repossession, you may need to work on that debt first to get back into good standing. Call the mortgage or loan company to work out a payment plan and do what you can to get back on track. This may mean you have to skip a few credit card payments or "rob Peter to pay Paul" for a month or two. 

4. Sell and sell some more. To get back on track, you may need to sell some things you are not using or using wisely. If you have things lying around not doing much, sell them. If you have more furniture than bodies, sell some of it. If you have extra vehicles, sell them. If you have a camper, motorcycle, moped, ATV, and more, sell them. 

You are trying to get out of the financial hole you have fallen in for now. When times are good again, you can buy them again. However, for right now, you need the money worse than you need them. If you do make a decent amount of money from selling them, you can pay off a lot of debt quickly and maybe not have to rob Peter to pay Paul. 

5. Call your creditors and the credit card companies. Negotiate a deal. Ask for a lower interest rate. Ask for lower payments. Do your homework. If they will not deal with you, you may need to do some drastic things like transfer the balance to a lower/no rate credit card. You may need to put that expense on a credit card to pay off if the creditors are not working with you. You may need to ask for a bank loan to get rid of the creditor or pay a lower interest rate. However, do your homework and make the phone calls.

This is not the time to worry about your credit history. Some companies do not report these debts to the credit bureaus. They rarely report anything past whether you made your payments on time and your balance on loans and credit cards. So if you can manage to make your payments on time, your credit history will be fine. Either way, you are trying to get out of a financial hole and your credit history should be the least of your worries. 

6. Call and negotiate. If you have non-negotiable expenses, you may still be able to get the bills reduced. Your insurance (car, home, rental, property) is one of the first places to start. You can pay less by taking a higher deductible. You may also be eligible for more discounts than what they are giving to you. Call them or your insurance agent to see what you can do to lower your insurance bills. 

Your cell phone and internet can be another place to change. You can change to a prepaid cell phone plan and cut your bill in half. You can choose a cheaper plan with less data or bandwidth.  If you are paying for others on your cell phone plan, re-evaluate what who should be on there. If they have their own job, they can be paying for their share of the plan or get their own plan. 

Which leads me to...

7. Parents: Make Your Adult Children Be Adults. I see a lot of parents going into debt or experiencing tougher times than necessary because they are still paying for their adult children. They are paying for their cell phones, car insurance, and more because they haven't cut their kids off yet. If your finances are suffering (and even if they are not), cut them off.

Disclaimer: If they are in college, I understand paying for some of their expenses. The same goes for if they are going through a hard time. However, at some point, the apron strings need to be cut. If they have a job and a place to live (or decide to live with you), it's time for them to pay their own bills and make their own financial decisions. 

8. Save money any which way you can. This is the time for extreme frugality. You may even need to border on miserly even though that seems harsh. However, this should only be temporary until you have your financial feet back under you again and your savings built back up.

Some ways to do this extremely:

  • Eat a strict beans and rice diet for at least one meal a day if not all week
  • Shower only a couple times a week to save money on water and bath products
  • No wasting food whatsoever
  • Borrow or rent before buying
  • Add water to everything you can to stretch it out (milk, juice, shampoo, conditioner, hand soap)
  • Skip a meal
  • No eating out at all
  • Always pick the cheapest option if you have to buy 
  • Always pick generic
  • Fix or mend whenever possible
  • Wear clothes more than once before washing
  • Use the same towels all week
  • Shop from home before going shopping
  • Grow your own food (seeds cost very little)
  • Carpool or ask for rides

9. Take care of your health and your relationships. This is going to seem like odd advice, but you cannot afford to get sick right now. You also cannot afford a divorce or a failing relationship right now. Keep buying and taking vitamins and supplements. Brush your teeth twice a day. Go for walks or runs. Do a free workout at home using YouTube videos. Ride your bicycle. Find a way to laugh every day. Keep in touch with your friends and family. Plan some free date nights or friends' night outs. Your physical, mental, and emotional health all takes a hit when you are this stressed out. While you do have a plan to deal with your finances, the stress will still be there. You need to take care of yourself so you don't incur bigger bills. Doing these things is still cheaper than paying copay and deductibles. 

10. Find ways to make extra income. I separate this from selling things because this is more of a long term solution. Find a part-time job or find ways to make money on the side. You can flip things on eBay or sell homemade items on Etsy. You can freelance. You can write for other people. You can pick up side jobs doing what you do for your main job like bookkeeping, fixing vehicles, repairing small engines, and more. The possibilities are endless for making extra money, but you have to give up some free time to do it. For this situation, that is a small sacrifice. 

11. Institute a spending freeze. This can be hard to do, but I rather like the challenge of it. I still do it for a week or longer if I feel that my spending is getting out of control. If this idea is overwhelming, try it for a week at first. You need to decide on the rules though. I still need to get to work every day so buying gas is non-negotiable. However, I don't spend money on anything else except for regular bills that week. I have done this for as long as a month. Some people have definitely gone longer just to save money. 

12. Look at everything as potential money lost. This is something I have picked up from reading stories about the Great Depression. Everything was used, fixed, mended, and reused until they literally couldn't make it usable anymore. They believed even disposable products (yes, they existed then too) could be reused or were a waste of money. Both sides of the paper were used. Wrapping paper (if used) was a newspaper or reused wrapping paper that was carefully folded and reused again. Food waste was a sin. By creating Depression-era thinking, you will realize that a lot of things can be reused, used creatively, and used for much longer than you thought possible. 

Getting yourself into financial straits is a hard place to be, however, it is not the end of the world. Mistakes happen and life happens. You can and will overcome this with some self-discipline and self-restraint. 

Thanks for reading,

Related Posts:
My Top 10 Frugal Living Hacks That Will Help You Save Money Everyday
16 Ways To Not Waste Food (and Use Up The Leftovers)

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Check out these books also to help you be more prepared for the future!


  1. I would add "never buy new" to the list. Obviously, some items you need to get new, such as toothbrushes, but many clothing and household items can be purchased for ten cents on the dollar at thrift shops and yard sales. Check curbside trash pickup and dumpsters for usable items that are being discarded. (Ask permission from homeowners first!)

    1. I agree! That goes for vehicles as well. I never buy new, and I save thousands of dollars. I buy a vehicle that is a year or two old with decent mileage. My family doesn't need the latest automobile with all the unnecessary gadgets and frills.

    2. I agree! That goes for vehicles as well. I never buy new, and I save thousands of dollars. I buy a vehicle that is a year or two old with decent mileage. My family doesn't need the latest automobile with all the unnecessary gadgets and frills.

  2. I like Ramsey's debt snowball too, but way back when i did my own version, I did it a little differently. I paid off the one with the highest interest rate first, then on to the next highest interest rate. Saves a little more that way, although I can see the rationale for Ramsey's way. Also, those little side gigs or selling off unused stuff can become a big income source. Three years ago I sold off some unneeded stuff. Now I look for more of that stuff and resell it on Ebay. It is bringing in some good money and it's a fun entertainment to frequent the yard sales and thrift stores. Even made some nice friendships with other folks doing the same!


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