Much of what we read is all high-level safe stuff about what people should do when facing tough economic times. And a whole lot of that advice is good for the masses, but what about what is best for the individual, you.
The government wants consumers not to lose confidence during tough times. The economy needs you to keep spending money to fuel business, but when you’ve done your part and you are tapped out, there is no safety net for an unintended financial failure.
Your spending to keep the economy afloat is at the personal risk of you and your family’s financial health. As an individual, the reality is that you are disposable, but you are indispensable as part of a collective of consumers.
So this article will focus on the top ten realities and what you should do as an individual when facing financial insecurity.
Cash Is King
While you don’t need to go so far as converting your cash to gold and burying it in your backyard, but you should treat cash in hand like gold.
It is much easier to control the outflow of cash that you’ve already earned and hold than it is to refill the cash reservoir. You need to take an ever more concentrated gaze of the outflow and ask yourself if you really need whatever it is that you are buying. If it does not have to be bought now, don’t. Hold onto all the cash you can.
Think about it like this, your cash is like water, and as you set out across the desert, you’d want to ration and protect the water you started with because you don’t know what situations you’ll run into along the way. It could be a long, hot, dry, and dusty journey.
Credit is Not Cash
Anything you buy on credit now that you absolutely can’t pay off this month is going to be a tightening noose around your neck as the weeks and months pass. That credit you can’t afford to repay immediately, when spent, immediately converts from a shiny attractive thing, credit, to a dark and horrid mass, debt.
Once the credit is converted to the debt, it must be served; you must give up cash to pay for it, and if you feed it only enough to make it content, it will cost you dearly over the years and years it will take to pay off.
It would be best if you stopped thinking about available credit as a safety net; it’s not. Please start thinking about your credit cards as only a financial instrument that allows you to make a purchase today on borrowed money and repay it tomorrow with your precious cash.
Run Away And Live To Fight Another Day
Now is not the time to try to increase your status with things. In fact, it is the time to be cool by shedding things. If you can sell the plane you are struggling to keep, sell it. If the lease is up on the shiny fast car, replace it with a used car that costs less each month.
What used to be shiny and cool is now just going to be a rope around your financial neck. You don’t have to go so far as to wear flip-flops, but scaling back will definitely be really cool when you live less stressed than your high-flying friends, who will be freaking out on how to make it through the month.
You can always buy more stuff in the future, and you’ll be better able to shed stuff now because those actions will protect your credit score and credit report. If you try to hold on to all the stuff you’ve got during tough times, I guarantee it will drag your cash or your credit down.
Throw Stuff Away
– If you are currently paying for a storage place to keep your stuff, take a second look at what you’ve got in there. Go through all the stuff there and either make room for it in your home or get rid of it.
Now is not the time to pay to store stuff. You can use that $250+ extra in your pocket each month.
Put stuff you can get rid of on eBay, Craigslist, or any other platforms to sell items. Maybe have a yard sale. Just try to get some cash for the stuff you no longer need. If it does not sell, throw it away.
If you don’t want to hassle with selling it and are just that lazy like me, then contact one of the many companies that will sell it for you and keep a percentage for their troubles. You can turn trash to cash, and that cash-only helps to refill your pockets a bit, or a lot if you factor in the savings for the storage place you just dumped.
Do Not Cancel Your Health Insurance
If you are thinking of cutting out your health insurance to make ends meet, don’t.
All it takes is one unforeseen and unexpected event to bankrupt you with medical bills.
Stop Paying Bills
If you’ve paid for the basic expenses like food, shelter, and clothing and you don’t have enough money to pay your credit cards, don’t pay them. It will make the credit card companies angry and hurt your credit, but it all that can be overcome. Creditors will only be happy when you send in the minimum payment but will only keep them happy this month.
The worst that will happen to you if you don’t pay the bills is some late fees; maybe your interest rate gets jacked up, some nastygrams, or unhappy phone calls. There isn’t much a debt collector can do when you are friendly, nice, and honest on the phone and tell them you don’t have any money to send them. Try to make the debt collector smile, make a friend of them and help them have a better day, but under no circumstances should you promise to make a payment you either can’t afford or have to use savings to pay.
If the situation continues for a long period of time, you might find yourself getting sued over the debt, but that can be dealt with. Promising to make payments you can’t really afford is not smart or sustainable.
Don’t Use Savings to Pay Some Bills
What! I know, it sounds crazy; after all, isn’t that what savings is for? Well, kind of. If you lose your job or your income is cut back in uncertain economic times, you may not know when it will be restored to previous levels. You need to use that money to pay for the essentials, and not all your bills are essentials. Mortgage, rent, car payment, food, medical insurance, etc., are essentials. Other bills aren’t.
Creditors will be pacified for this month when you reach into your savings to pay the bill, but when you reach the bottom, they will not thank you for all the months before draining your savings to make them happy. No, they will be just as disgruntled and unhappy as if you had stopped paying them months ago. Draining your savings didn’t change the inevitable; it just delayed it, in worse shape, and left you dry.
If you do anything with your savings, move it to a bit more distant high-paying savings account that will earn you more as it sits there and be less accessible to immediate temptation.
It’s Not Worth What You Want
If you are trying to sell your house or some fancy car and people keep making you insulting low offers, get off your high horse and take a clear-headed look at what it is that you are selling. Often the first offer is the best.
Holding out for more often leaves you nothing. You don’t get cash unless you sell, and in any economy, the fair price is that price at which the buyer and seller agree. Period. If you need to unload some asset noose around your neck, then you might have to sell it at a loss.
Far too often, people ruin their home’s sale because of the value they place on their home. When you bought it, you were told it would go way up in value, and when the real estate agent came to help you sell it, they said it was worth a lot, but you’ve got to look through that smokescreen.
The original promise that your home was going to go way up was a marketing tool to persuade you to buy it, and the high value that the real estate agent told you when you put it on the market was an inflated value to make you think you would get more and list your home with them so they’d get a commission.
Consider the Unthinkable
If you have followed all of these steps and you are still finding it hard to survive then you should learn more about the unthinkable – bankruptcy.
Bankruptcy feels shameful, feels dirty, and can be the secret you’ll want to keep from people at work, but the reality is that bankruptcy is a legal and viable way to clear debts that are now dragging you down. The vast majority of people that find themselves in these difficult financial situations wound up there because of factors beyond their control. Either they had their income cut, got sick, had a change of marital status, etc.
It is a bigger tragedy to watch people struggle along for years trying to satisfy debts when they could have used that time to rebuild a new and better future. You have to ask yourself if it is reasonable for us to allow a family to go month-to-month with no health insurance because they don’t want to go bankrupt or to clear bills they can’t afford and now be able to afford health insurance.
You can find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Bankruptcy is the fastest way to get a fresh start for the least amount of money.
Remember What Is Really Important
Being able to spend at will and buy what you want feels good. Having really nice stuff to show people how successful you are, is a high. But at times like this, trying to hold on tightly to what is no longer sustainable creates stress and friction in your life.
This stress and friction create tension and pressure at work and home. Suddenly, before you know it, you live in fear, depression, uncertainty, and wherever you turn, you can’t see anything good or happy in your life.
Now is the time to set some new priorities about what is most important. Is it more important to pay that credit card bill you can’t afford or to go to your kid’s game? Is it better to hug your girlfriend and share with her how much you love her, or to fight about what you can’t change?
Now is the time to find gratitude in your life and be grateful for the simple daily pleasures. If someone holds the door open for you, thank them. Hold the door open for someone else.
Random acts of kindness not only make someone else feel better in tough times but make you feel better also. Instead of enduring your suffering in silence, do whatever little things you can to be nice and find moments of joy instead of solid days of pain. Trust me; it is a big help.