3 Tips To Help You Survive and Prepare For Personal Financial Disasters

Personal Finance Tips

Back in 2007 when I graduated from college our country was facing an economic depression. I was laid off form my first 3 jobs out of college. Government officials were denying it and bickering over whether it was real or not, but if you were one of the estimated 2.6 million individuals who lost their job it was very real to you.

It seems that our economy is on the rebound for the most part, but, what about personal financial disasters? Just because the country isn’t experiencing one doesn’t mean that your finances and household are safe. Divorce, job loss, natural disasters, and illness are events that can throw a wrench in even a solid financial situation.

Portions of this post originally appeared in Madame Noire.

Here are 3 Tips to Survive a Financial Disaster

1)   Communicate: Many people do not realize how flexible and accommodating companies can be, especially if you have had great payment history. Reach out to your creditors, explain your situation, and find out if they have a hardship program that you would qualify for. During my job transition last year my credit card company waived the interest charges.

2)    Downsize your life: Contact utility companies and find out if you can reduce your cost by taking advantage of promotions or downgrading your package.  Do you really need the triple play package? Do you really need cable?  Eliminate unnecessary bills and reduce your spending to needs not wants. Sorry to tell you but weekly manicures and dry cleaning services are not needs.

3)    Assess your current fiscal responsibilities: Create a plan to manage your finances. Now that you have reduced your spending create a real plan that will sustain you during this disaster. Determine whether your going to pay down debt during this time or just pay on your debts. Determine if you can afford to put money aside for savings and investing.

No one likes to be caught off guard. Once you make it through a financial disaster try these things to prepare yourself for the next unexpected occurrence

 3 Tips to Prepare for Financial Disaster

1)    Financial Disaster Fund: Calculate how much you life costs you including all of your needs and save at least 3x’s amount. This account is for emergencies so once you reach the goal amount set up another savings account so that you don’t dip into this one.

2)    Get on a Budget: Control your spending. You don’t have to live like you are experiencing a disaster, but be conscious of your spending and question each purchase.  This will help you save more and will soften the lifestyle blow should a financial disaster occur. Do you have to have a “girls” night out twice a week or  can you host a girls night in potluck? If you want to eat out try substituting expensive dinners for happy hour deals (one of my favorites in NYC is $2 taco Tuesdays)

3)    Diversify Your Income Streams: Get resourceful and tap into your creative abilities. Create side hustles so that your survival does not depend on an employer. It could remain a side hustle or it could turn into a full-fledged business. You’d be surprised at the ways people are creatively funding their lives. Having difficulty figuring out your side hustles? Check out my girl over at Dear Debt Blog, I thinks she’s a master side hustler.

Have you experienced a financial disaster? How did you cope? Have you taken the steps to prepare yourself for the next financial disaster?

Ready to Begin? First Steps to improving your Finances

 

You’re ready to get your finances in order, but where do you start?

I am asked this question on a weekly basis and I completely understand.

In a previous Twitter chat I stated, “Looking at your credit report for the first time is like walking into a room and all of your bad financial decisions are hanging out.” It can be absolutely overwhelming. It’s especially overwhelming if you are essentially starting from scratch.

There are many different plans of action one can take, which I think are relative to your situation. While retirement is extremely important; establishing good financial habits and a budget are even more important.

Step 1: The first step I recommend is securing employment or establishing a regular form of income. To accomplish your financial goals you will need…finances. Being underemployed is different from unemployed and can be an issue on its own but the important thing is to become employed so that you can take care of your necessities (rent, food, transportation, childcare, etc.).

oneweekbudget

Step 2: Establish a budget. I highly recommend my friendtor’s (Friend + Mentor) Tiffany “The Budgetnista” Aliche’ book, The One Week Budget which can be purchased on Kindle for less than $1 here . I highly recommend this book and often refer to it myself.

Familiarize yourself with your credit report. Identify any debts owed and the amounts. This will be key in determining a “get out of debt plan”. Be patient. Remind yourself that getting out of debt often takes longer than it did to get into debt. It is possible. Try a site like Quizzle or my credit report tutorial to gain access to your credit report.

Step 3: Designate an amount you can afford, to build your emergency fund.  When I say what  you can afford, that doesn’t mean only putting aside $25 a month because you have $100 on the side for your fun fund.

Establishing an emergency fund is essential. I recall after graduating from college I was laid off from 2 jobs. One went bankrupt and the other one reorganized after coming out of bankruptcy. Job security is not what it was for our parents and grandparents. It is important for you to prepare for whatever may happen. The amount you put aside each month should take into account how much of your current income you will need to pay off your debts. For example, currently I put aside roughly $300 per month and hope to boost that to $500 per month by next year.

While you should be concerned with investing – unless your job has a matching program, which would essentially mean free money – focus on getting your savings together and your debt down.  During this process, I learned emergency funds are used before retirement account funds.

Once you grasp the basics, begin exploring your investment and retirement options.

Also remember, there are more people experiencing financial difficulty than those that do not. I know a lot more financial messes than successes. Find a finance buddy and hold each other accountable. It’s so much easier when you are working with someone else to accomplish your financial goals.

 

The Time a Debt Collector Made Me Cry

Once upon a time a debt collector made me cry. She shattered my world with her lack of consideration for my situation and up until a few years ago I resented her and wished nothing more for her than a miserable life of being known as the source of others misery.

It was 2007 and I had just moved back into my patents house after leaving the abusive relationship. I used all the money I had to drive home to Charlotte, North Carolina from San Antonio, Texas. I was rock bottom. I was estranged from my friends.  I had left Miami before graduation to support my then mentally unstable, steroid addicted boyfriend as he pursued his dream as a mixed martial arts fighter. I was enrolled in an online finance course so I could finally finish my BA but that finance class was a completely different beast from my Public Administration courses and I had a C, which threatened my undergraduate career.  So I was poor, pregnant, emotionally scarred and broken, facing the possibility of failing the class my degree hinged on, and falling deeper and deeper into debt.

While Iw as living in Texas my mom would always fuss about debt collectors calling her house (up until three years ago my life was unstable so my parents address and phone number was my permanent house). About a week after being home a debt collector called and my mom was more than happy to hand me the phone. For the first 6 minutes I tried to reason with the woman but when that wasn’t working I got personal.

crying on phone

For some reason I thought she’d understand and back off. I told her “I’m unemployed, in college, and pregnant”. She responded, “it’s not my fault you were dumb, this debt needs to be paid and you need to uphold your financial obligations.”

I cracked. Even the debt collector realized how dumb I was. My mom came running into the room to find me yelling and crying at the same damn time. She took the phone, cursed the girl out and furiously hung up. I stopped speaking to debt collectors that day and continued to sweep my debt under the rug.

Debt is frightening. It can be depressing and overwhelming. Since those days I’ve grown incredibly and learned how to deal with my debt do I don’t have to deal with debt collectors anymore, however for many it’s an ongoing reality. I began to arm myself against them by learning about my rights as a consumer and that debt collector harassment is prohibited. Becoming an informed consumer, has been one of the best decisions I made for myself and it is a core reason of why I started MyFabFico. Many people don’t know their rights when it comes to debt and collectors often manipulate people into making decisions that make things worse by praying on fear and shame.

Check in later this week. I will be providing valuable resources about what consumer rights  against debt collectors.

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Created by nationally recognized millennial money expert Tonya Rapley, My Fab Finance is a leading financial education and lifestyle blog for millennials who want to become financially free and do more of what they love.
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