Preparing for Financial Crises
In an up and down economy, it is an unfortunate fact of life that families need to be prepared for unexpected financial problems. Whether its being laid off from a job, medical bills or a natural disaster, being prepared for when a crisis strikes can help ease the stress of the situation and get you on your feet more quickly. The following ideas can help:
1. Create an Emergency Fund
Whether you save 10 percent of every paycheck or transfer leftover money to savings at the end of every month, having an emergency fund can be your first line of defense when a disaster strikes. If possible, work to have six months worth of income saved away in a savings account. This money should only be used in the event of an unexpected, large bill, such as medical costs, or if you lose your job. As you develop your savings, it can be invested in low-risk bonds or stocks, but avoid high-risk ventures where you could lose your money or won’t have access to it when you need it.
2. Purchase Insurance
Having car, homeowner and life insurance can all help when certain events occur. While the insurance may not cover everything, having that supplemental money can be a big help. In addition, if the breadwinner of the household dies, having that money to live on while looking for income and restructuring your life will save a lot of heartache.
3. Stock Up on Essentials
Separate from saving money, stocking up on extra food and medicine while you have an income and health insurance will give you something to live on, should you be unable to afford food or medicine. If you have medicine you are absolutely dependent on, try to save up to 6 months to a year’s worth, so you have time to get back on your feet and get new insurance. Having several months of food in the house, can provide much needed relief when all of your resources are going toward a hefty bill or other expense.
4. Consider Re-financing or a Loan
Sometimes to get out of a crisis a family simply needs less bills or more income right away. In these instances, refinancing a mortgage to make smaller payments, or getting a loan, such as at title loan, can help. When considering these options, consider what you need immediately and what you can afford to pay in the future. In general, get a loan for the smallest amount that you need, and be sure you will be able to pay it back with interest. When re-financing, consider the cost of paying additional interest will be when determining how long to stretch the loan out for.
5. Know about Assistance
There are many government and private institutions that are willing to help in the middle of a crisis. The government will often supplement those recovering from a natural disaster, and many hospitals will help reduce costs of medical bills, if they are too high for you to pay in full. Learn about the types of assistance available before a disaster strikes, so you will know who to go to in a time of need.
Samantha Byrd is a professional blogger that provides consumers with financial advice and information. She writes for Title Loans of Savannah, where you can get Savannah title loans online and a title pawn in Savannah GA.
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Category: Financial Education
