Money Matters: Handling financial hits without help

January 20, 2017 01:30

Sponsored by NEFE

We've all heard the mantra from financial planners: Pay yourself first each payday, to ensure you have an emergency fund in place to handle unexpected expenses. Many recommend having three to six months take home pay set aside just for that purpose. But if you're living paycheck to paycheck, holding that level of savings can be challenging. If you have no savings, or if your savings were depleted by an earlier financial crunch and you're suddenly faced with another, what can you do... particularly if you have no resources available from family or friends?

As as U.S. News Money outlines, there are some options, even if some must be considered the lesser of evils. For example, you can sell personal property for cash; anything from unused clothing or electronics to your car, if necessary. You take take on another job to increase your income, or slash monthly expenses to extract savings. You could tap into the equity of your home or an insurance policy, or even your retirement plan or 529 account, but these carry longer-term consequences. You can try to negotiate with creditors to reduce payments over time or settle on a lower payout. And if it becomes necessary, you can consider declaring bankruptcy. All are difficult choices, best avoided by having some kind of savings.
To help your listeners/viewers/readers understand their options when faced with a financial crisis, talk with credit counselors or attorneys in your area who specialize in debt resolution. They can explain different strategies that might make sense in different situations, to help get out of debt and get through financial struggles.

Sponsored by the National Endowment for Financial Education
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