⚫ How to
Cope with a Cash Crisis
If you are hit with a serious money crisis and you find yourself
scrambling around
for emergency money,
here’s how to assess your situation and get back
on your feet.
All of a sudden and without
warning, your roof begins to leak! Your hot water heater shuts
down and your
computer goes up in smoke,
the clutch needs to be replaced
in your car and your son decides to have his wedding on the Isle of Oahu –
all of this within the same week!
As you sit, stunned and
you ponder an exit strategy
you receive a friendly letter
from the IRS explaining that you miscalculated your taxes in 1996, and
they now own your house.
This Kind of Money Emergency Requires your Immediate Attention What
do you do?
The above
scenario looks like a money emergency of biblical proportions. You are afraid
to open your front door for fear of finding
a swarm of locusts!
Thank goodness,
there are things you can still do to restore your financial life and equilibrium—and perhaps
even fend off future misfortune—without having to sell your very soul.
⚫ 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.
1)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.
2)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.
3)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.
GET MY YOUTUBE SCRIPT EBOOK ON -https://amzn.to/33HLPdG
YOU CAN USE THIS SCRIPT FOR PERSONAL USE
0 Comments