From time to time, I work on a volunteer basis to help people who are in financial crisis. I was recently asked to work with a couple who had found themselves in this situation due to a job loss, and given the current economic environment, I presumed that some of our readers could relate. The following are some tips that we followed that might assist you or someone you know.
Get liquid quickly: Our first step was to take inventory and stockpile cash as quickly as possible. This ranged from consolidating small cash accounts to taking the ‘cash back’ from VISA to selling items on Amazon or Ebay that were saleable.
Go ‘Spartan’: Every expense was scrutinized and anything not absolutely necessary was eliminated. And, no, Starbucks is not a necessity! We even contacted the utilities company to convert to a flat monthly payment rather than variable so that cash flow would be steadier.
Negotiate, negotiate, negotiate: In life, almost everything is negotiable. They are speaking with credit card companies to eliminate interest and get on a payment plan. They have even spoken with their landlord and have reduced their rent by 35%. If you don’t ask, you’ll never know.
Network, network, network: This couple has contacted every person they know and have had countless meetings and interviews to get the word out that they are seeking employment.
Fortunately, they were some of the lucky ones who were able to find employment. Nevertheless, some of the actions that were taken would not have been necessary had they been financially prepared. The credit card debt was a result of living beyond their needs. The cash flow crunch resulted from not having an emergency fund. Nevertheless, in the words of M. F. Weiner, ‘Don’t waste a crisis.’ Use a financial crisis, or even a threat of a crisis, to start building the right habits into your life. You may find that with a proper view of money, you will emerge with a ‘richer’ life.