Found Money: How To Generate
Quick Cash In An Emergency
Learning to Cope with a Money Emergency
Wherever there are money woes, you can be
sure to find crippling emotional setback. Avoid it all you try,
you might just as well begin to prepare for the devastating
fiscal and the emotional fallout that is sure to come. You will
need to cope very well with both if you hope to make a solid
financial comeback.
Whenever a money emergency hits, it will be
your ability to deal with the individual pitfalls that will hold
you in good stead. It is when a series of financial hits come
your way that the stress will tend to accumulate and make your
life much more difficult to cope.
You will not be so overwhelmed when you can
calmly and rationally look at each individual problem as it
arises. If you sit back wringing your hands with worry and allow
all of your emergencies to pile into one; you will find yourself
down for the count.
Calm must take center stage. You must NEVER
allow yourself the luxury of panic. There is no one there for
you to just take over. You are all you have.
The more you panic, the less effective you
will be. You need to keep a very clear head to be able to sit
down and come up with an appropriate plan. Be aware of your own
tendency to sabotage your plans further. It is only when you are
at your most calm that you will be prepared to get to where you
need to be and then overcome.
Being Calm is the First Key to Managing a
Money Emergency
At even the first hint of a money
emergency, it’s important not to act right away. If you do you
will inevitably make a mistake! First, before you can manage
your finances again, you have to first manage your emotions. You
absolutely must regain your balance before you can even begin to
make a plan.
If your money emergency demands that you
act quickly, think first about seeking the advice of a debt
counselor, money coach or financial planner. Whenever possible
think about seeking out the aid of a financially perceptive
friend or family member who can help you to come to a clearer
perspective.
Remember the old adage that “two heads are
always better than just one!” You won’t need to make a major
cash investment if you’re strapped. Look for a planner who will
give you a one-hour consultation for $150. Often times this will
be all you will need to securely turn the corner.
Time to Crunch some Numbers
The first step toward establishing
financial stability is to step back, take a deep breath and
assess the damage. Possibly one of the bigger mistakes people
make when they’re in a financial crisis is not being prepared to
make a clear assessment of where they’re at.
You can easily become overwhelmed. However,
totaling up the damage serves two important purposes. First, you
need to know exactly how much you owe, how much money you have
in hand and what it will take to cover the distance between the
two. Second, you will want to avoid any other mishaps, such as
penalties, further repairs, missed deadlines, etc.
If you are not properly prepared, you must
become prepared on the spot. Any type of money crisis will catch
you unaware and you will feel cornered. Wouldn’t it be ideal to
be ready and waiting for the crisis? How likely is this to
happen to you, though?
Most people will be at least somewhat
prepared. If the crisis is not too dire, they will be able to
handle it ok. Some will be sunk from the get go. The idea is to
not be overwhelmed and to have a good plan of action, no matter
how little or how a lot. You need to be entirely prepared to
deal with any sized setback.
Ideally, those unexpected expenses could be
covered by the funds in the Irregular Expenses account in any
good budget. Unfortunately, though, there is always a common
problem. You might well have an emergency stash—but it’s most
often depleted. This same problem affects the majority of us so
take heart.
At about this time many people make the
mistake of turning to plastic for relief. Resist this one. You
will only be transferring your problems from one pocket to the
other.
On the other hand, if you are sure you can
handle using credit cards to deal with a cash emergency, you had
better be sure you could pay them off when the time comes.
Otherwise, why add yet another debt and another problem.
Eventually, it will all catch up with you.
If you’re truly running while on your last
leg, consider taking out a home equity line of credit. This will
work for some. The interest is tax deductible, but those aren’t
fixed rates. Be smart about this remedy, though. Unless you plan
to pay back the amount you borrowed promptly, it can end up
costing you more than you thought—especially if you’ve already
depleted your own equity.
The Idea is to Make a Smart Decision and
not a Rash one
Think well before borrowing from your
401(k) or IRA. There are loopholes that allow you to do so, but
there are also hidden costs—never mind potential taxes,
penalties and other consequences. Keep in mind that if you were
to lose your job, you’d have to repay the loan immediately, or
be taxed as though it was a withdrawal. This remedy could be
very costly in the long run.
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