Debt Relief: How to Help Yourself During a Financial Woe
In the current economy, many people are experiencing financial troubles: hours being cut, pay cuts, or simply finding them self out of a job all together. Once in this scenario, there is not much to come up with a plan that may help off-set some of issues that come up with the situation. But there are things that an individual can do before a problem does arise.
First is identifying the basic household needs? The most basic is the roof over the families head. Without a home, nothing else can happen. If one is in an actual house, it is best to pay it off as quickly as possible, prior to any financial woes that arise. However, there are some that feel it is important for credit purposes, or tax write-offs to have a monthly mortgage. If one of these is the case, then in your emergency savings, either have enough saved to pay off the mortgage, or enough saved to make your mortgage payment for at least a year.
A year, typically is enough time to allow someone to find a job with an income that will allow for continuing living in the home that they are comfortable with, or possibly make arrangements to sell the home to find a lesser expensive accommodations. With this in consideration, not everyone is working towards owning that home that is mortgaged to the hill. Some people are renters. With the renters it is much more simple. Follow the one year rule, one must have at least, emphasizing at least, one years worth of rent set aside to allow the roof to remain over the families head.
The car payment is another essential that can not be over looked, especially in the event of unemployment, as it is a excellent tool for finding another job. It is best, like in owning a home, to pay off the car as quickly as possible, or again to save enough money in the emergency fund to pay at least a years worth of loan payments. Of course, don’t forget to include a years worth of car insurance, and your home owners insurance. Great plan is to go with the same insurance agent for discount.
The one year rule is a good guideline for other basic essentials. In the emergency fund, allow for one years worth of funds for other items that one would find or consider a basic household need: for example, electricity, phone, food, cable, internet, medications, etc. For the non-essential items, such as dining out, or movies, can be placed into the emergency fund but should be done with extreme moderation, or eliminated as much as possible.
Credit cards seem to be the most dangerous commodity during a financial crunch. The emergency fund will allow the cards to be put away and not be used during this time. After all, one does not want to make matters worse by going further in debt. When it comes to the emergency plan, it is always best not to use the card, not only in the bad times, but the good times. During the good times, it is always good to pay off the balance every month. Most people do not do so and thus are carrying a continuously growing balance. With this in mind. It is important to have enough money set aside to pay off the balances. If not, well, follow the one year plan. Have at least enough set aside to pay the minimum balance for at least the one year.
In mentioning the one year plan, do not forget the children, especially the ones of school age. Kids grow will tend to outgrow their cloths and shoes, as well as need school supplies. Set enough money to allow for one full year of intended purchases.
Last but not least, when planning ahead, find things that can be in the home ahead of time that would also ease the burdens of a financial strain. These things can include non perishables: such as toilet paper and canned foods. But this can also allow to have games and other forms of entertainment that would amuse the family, and thus not making it seem quite as bad around the house.
Meantime, enjoy what you have. Do not forget family and friends. But most importantly, remember that this to shall pass.