Steps to Take in a Financial Emergency
No one wants to find themselves in a financial emergency. Nevertheless, any type of financial emergency can happen. Most of the time, they come out of the blue, which makes them particularly hard for individuals and families. In fact, the typical household in the United States already owes credit card companies almost $10,700. Adding more financial burden on top of that already large load could lead to bankruptcy.
Does this mean that there’s no way out if you discover that you’ve become the target of a major financial emergency? Absolutely not. You always have some kind of recourse. However, it’s important to remember that you may not like your options. Still, it’s better to know that you have choices than to feel like you’re completely out of answers.
Below are several situations that can lead to a financial emergency for you or for your extended family and household members. Each situation includes some ways to help avert a complete fiscal crisis, if possible. Of course, your case may be different. Therefore, you’ll want to use these suggestions as recommendations and proceed as necessary based on the specifics of what’s happening to you.
Situation #1: A Loved One Passed Away
Death, whether it happened suddenly or after a long illness, can cause a lot of emotional distress. It can also be very expensive, especially if the loved one did not have savings for a burial.
Depending upon what kind of services you intend to have, you may be able to at least cut back on your costs and avoid a major financial emergency. First, talk with your preferred funeral home. Ask about cost-saving measures they may be able to suggest. Some funeral homes may even allow you to pay over time, with interest. Though this may not be what you want, it can be a quick, cheaper solution in the short-term if you’re low on cash.
Secondly, consider alternatives to a traditional burial. Would your relative have been open to being cremated? Not having a burial plot and instead keeping the ashes or scattering them later? These are all ways to avoid the higher cost of embalming, paying for a casket, paying for a plot, and paying for all the other expenses.
Finally, you can always see if you might be able to hold a remembrance at your home. Many funeral homes and crematoriums will cremate the body and give you the ashes. This allows you to wait until later to decide what to do in terms of a final resting place. In the meantime, you can hold a celebration of life event at your house or the deceased’s house for free. Though perhaps not what you originally intended, taking this step can help you spend less money while still giving your loved one a dignified, beautiful send-off.
Situation #2: Your Significant Other Wants a Divorce
“I want a divorce.” Even if you’ve been having issues with your spouse, you may be surprised to hear those words. Realizing your marriage is headed for divorce can be scary. It can also make you immediately go into financial emergency mode.
Let’s be honest here, too: Divorce is not cheap. Paying for divorce lawyers can cost a bundle, especially if you and your spouse aren’t on speaking terms or the divorce turns ugly. If you’re most concerned with saving money throughout the divorce, as well as keeping your household from turning into World War III, try taking a few steps.
The first order of business may be to approach your spouse about counseling. Sometimes, couples can rectify their relationships, even if they’ve spent years growing distant. Your spouse may actually be on board with going to therapy to see if the marriage can be saved. Therapy visits can be a lot less expensive than undergoing a divorce. Plus, you could wind up being happier together than you had been for the previous years.
If your spouse isn’t open to counseling, request having your divorce mediated. A trained mediator can help you and your spouse work out all the arrangements in your divorce. For instance, who gets the family home? How will child custody be arranged? What about the dog and cat? Mediation appointments are always aimed at coming to win-win arrangements for both parties. Of course, this isn’t to say that mediation will always pan. For some couples, mediation just isn’t the right solution. But it’s definitely worth a try. In some states, it’s legally required before moving on to divorce court proceedings.
At this point, you’re probably going to want to hire a divorce attorney. Divorce lawyers come in all shapes and sizes. Some charge less than others, especially if they’re just starting out. You can always ask them for their fees upfront. That way, you can pick the right lawyer for you.
Another way to make your divorce less of a financial emergency is to try not to dig your heels in the sand too hard. The longer you hold out about a certain subject, such as who gets to keep the older car, the more you’ll pay in legal fees. Ideally, you want to spend as little as you can so you have more to start your new life post-divorce.
Situation #3: You Are Accused of a Crime
Whether you’re guilty or innocent, being charged with a crime is a terrifying prospect. Aside from the immediate shock, it carries long-term repercussions if you’re convicted. People who have criminal records often can’t get certain types of loans, can’t work for certain employers in particular industries, and may not be able to rent an apartment.
Even if you’re in a financial emergency already, this is one time you have to consider your future. If you don’t have someone on your side to help guide your every move, you could lose everything. Consequently, you’ll need to find and hire a criminal law attorney.
It shouldn’t be too tough to uncover a criminal lawyer in your city. Most places have many lawyers who practice in this area. Above all else, make sure the one you pick has enough experience, notably helping people accused of the crime you’ve been accused of.
For instance, let’s say that you’ve been charged with DUI, which is driving under the influence. You’ll want a criminal law attorney who has worked with other DUI clients. Of course, you may be guilty as charged. Even so, a criminal lawyer may be able to negotiate a lighter sentence or even get the courts to remove your charges completely if you attend classes and perform certain community services.
Now, you might be a DIYer from the get-go. In that case, you’re probably wondering if you should just act as your own lawyer. All signs point to “no” on that. Trying to defend your actions in court can backfire supremely. It’s best to accept that you may have to pay upfront to get yourself out of this type of hot water.
Situation #4: You Lose Your Job
Few employment issues strike as much fear in workers as hearing the words, “We’re letting you go.” So many emotions can be at play during those moments. Anger. Sadness. Frustration. Concern. Above all else, though, you need to keep your composure and figure out how to deal with the situation.
A good way to begin, especially if you’ve been laid off because of downsizing rather than fired for doing something wrong, is to request a letter of recommendation from your boss or even the company CEO. A letter of recommendation explaining that you were let go through no fault of your own could go a long way toward netting you an interview with a different company.
After getting your letter of recommendation from your soon-to-be-former employer, dust off your resume. Look it over and make sure it reveals the whole picture of your professional life. Use numbers whenever possible to punctuate how much of an asset you’ve been to your company. Be sure to include promotions and advancements, especially if they occurred while you were climbing the corporate ladder at one place.
Don’t hesitate to spruce up your online presence on LinkedIn and other social media sites, too. Update everything and take down any pictures that might make you seem like you’re not an efficient worker. Now is the perfect time to scrub your online presence of anything that would make a potential employer say “no” to bringing you aboard.
After sending out resumes on a daily basis, do your best to reduce your financial emergency by picking up a part-time gig. This could mean anything from driving for UberEats or working overnights at your local grocery store. Even if you’re making quite a bit less than you were before you lost your job, you’ll be bringing some money into your household. Plus, you’ll be staying active, which will be important for your mental health and positivity.
Above all else, don’t lose hope. Lots of people have lost jobs only to discover brand new careers that fulfill them to the core. You never know what amazing things can come from scary life events.
Situation #5: Your House Needs Repairs
It doesn’t matter if it’s a minor or major repair: any house repair can be expensive. Take plumbing services, for example. Your plumber may discover a nasty leak that’s led to mold throughout your basement rec room. All of a sudden, you’re forced to not just pay for the plumbing company’s visit, but also for mold remediation services.
Owning a home is undeniably a pricey affair, especially when those unforeseen repair bills creep up. To stave off a true financial emergency, you could put aside around three to five percent of your home’s value to cover annual maintenance fees. This means if your home is worth $200,000, you would want to have at least $6,000 yearly to spend on everything from working with a roofing contractor to fix loose shingles to hiring someone to clean out your chimney and make it safe.
What happens if you don’t have the funds immediately to pay for repairs? You may be able to wait a little bit on some repairs, such as a broken window in your unheated shed or garage. On the other hand, you probably don’t want to wait forever. Repairs that have been ignored tend to get worse and cause other issues.
You may have to put your home repairs on a credit card. Alternatively, if you own equity in your house, you could borrow against the equity with your financial institution. Setting up a line of credit protects you against having to suddenly dip into your savings to offset the cost of home repairs.
Situation #6: Your Home is Destroyed by a Fire
House fires are tragic, scary events. They’re also costly, especially if you don’t have enough home insurance or your negligence caused the fire and you have to pay for fire damage restoration solo.
To avoid having to pay too much out of pocket in the event of a fire, do your best to remove and reduce all fire hazards. Plus, be sure that all your smoke detectors are in proper working order. Lastly, go over your home insurance policy so you know what’s covered in the event of a fire that destroys everything.
Situation #7: Your Pet has an Emergency
Just like humans, pets can become very sick very quickly. However, most pet owners don’t carry pet insurance for their furry friends. This means that one sickness or accident could cost you thousands in veterinary hospital bills.
You can’t necessarily sidestep this kind of financial emergency. But you can talk to your vet if you get presented with high fees for services. Veterinarians understand that pet parents may need a little time to pay down invoices. Ask nicely to see if your veterinarian will put you on a payment plan that allows you to bite off little chunks of the overall bill over a period of months.
Situation #8: You Are Injured
Personal injuries can happen for all sorts of reasons, such as during backyard pickup football games or while on the job. Before you know it, you could be told that you need laser spine surgery, an MRI, and a lifetime of pain management pharmaceuticals and treatments.
Obviously, if you have healthcare insurance, you’ll want to make sure that it kicks in when appropriate. Even if you have a high deductible, you shouldn’t have to pay beyond that deductible. If you’re asked to pay more, advocate for yourself. Ask questions and try to bring your bills down if you can. Many patients have discovered discrepancies in their invoices by being diligent.
Wondering if a financial emergency is right around the corner? Don’t spend your life worrying all the time. Instead, take a few steps to ensure that if a financial emergency does rear its head, you’ll be ready.