There is nothing more frightening and concerning than a financial disaster. With the economy constantly fluctuating from good to bad, it can be difficult to feel financially secure.
Everyone has heard stories about someone losing their job out of the blue and suddenly sinking into debt. We all want to avoid that as much as possible. Saving money and spending wisely are perhaps the most important strategies for avoiding a financial crisis.
However, even these strategies aren’t foolproof. Here are four ways to handle a financial disaster once it strikes.
1. Start Cutting Expenses Quickly
When a financial disaster strikes, its critical to maintain the money that is still left. Frivolous or unnecessary expenses should be cut-off immediately to help decrease the amount of funds leaving your accounts.
It is helpful to make a list of all your monthly expenses and order them from ‘absolute necessities’ to ‘wants or desires’. Food would be an example of an extreme necessity, while cable television would be a desire. Start cutting these monthly expenses starting with unnecessary things. This strategy will help to cover all of the leaks that are in your savings account.
2. Look for Available Credit
While debt is never good to enter into out of necessity, it can act as a temporary support during times of financial need. Talk with banks and credit card companies to see what kind of credit for which you are eligible.
If you don’t own a credit card yet, consider investing into one. The credit they offer is a great way to stay afloat when you’re running short on cash. Credit should always be used with the intention of getting out of debt and earning more money. Relying solely on credit will only worsen your financial situation.
3. Think Twice About Dipping Into Retirement Funds
If you’ve been saving diligently for retirement, then that 401k will look very appealing during a financial crisis. While these funds can be dipped into in a true emergency, it should be left as a last resort.
Dipping into a 401k account before retirement comes with a host of consequences. First and foremost, the taxes will be higher. You will also be throwing away all of the work you had put towards retirement.
This decision could easily delay your retirement by a few years or more. It is important to avoid dipping into these retirement funds for as long as possible.
4. Consider Applying For a Loan
During a Chicago financial crisis, people tend to get desperate for money. The primary concern in this situation is finding temporary funds in order to stay afloat by covering food and rental costs.
Fortunately, there are several avenues for receiving loans from banks and different loan providers. For example, a Chicago title loan would offer funds while taking a vehicle as collateral. Some banks or other financial institutions may offer loans without collateral depending on the quality of your credit.
Nobody truly understands the fear and anxiety associated with a financial emergency until it happens to them. As markets can change with each passing day, financial stability isn’t entirely under our control. It is important to have some strategies prepared in the event that a financial disaster does occur. These four strategies can help you get started in the right direction.