Welcome to Day 7 of 30 Days To Your Financial Freedom Challenge!
One way to help yourself during any financial crunch is to figure out what is happening and ways to fix it by asking yourself the right questions. You cannot budget your way out of a crisis if there is no money, and you can’t spend the money that does exist erroneously if you want to improve. Start by asking yourself these questions.
Can Your Current Income Meet Your Expenses?
Add up all your expenses and then deduct that from your income. Do you have anything left over at all? If so, you’re in an excellent position to reorganize, reduce, and eliminate expenses to shore up accounts for the future. If not, eliminate all expenses that are classified as wants and keep your needs only. Shelter, food, health care, and in some cases, transportation and daycare, are classified as needs.
Do I Have Savings Equal to Three Months Expenses?
Multiply your expenses by three and then check your savings. Do you have access to that amount of money right now? If you do, you’re in a great position to keep going as you are while seeking ways to reorganize, reduce, and eliminate extraneous expenditures like your money shop coffee and muffin. If not, once you’re on your feet, set up a plan to build that emergency fund as fast as possible.
Do I Have Unsecured Debt?
If you have credit card debt, that is considered unsecured debt. It’s the most expensive debt you can own and can cause many problems for you during any type of financial crunch. If the crunch is countrywide, the credit card companies can raise your interest, cut your available credit, and generally make your issues worse. If it’s just your personal crunch, as long as you make min payments, they won’t even notice. You may be able to call and get a reduction in interest or reduced payments temporarily if you’re in good standing when you call.
Do I Have Regular Financial Investments?
If you’re investing money regularly now, you can stop those payments temporarily. In some cases, you may even be able to get into your investments or turn them into an income account, depending on your age and situation. However, if you’re not already close to retirement, try not to touch any retirement accounts until you have to, especially if you’ll be penalized. Stopping your payments should only happen to pay for your needs, not your wants.
What Are My Income Streams Now?
Create a list of all the ways you bring in income right now. Can you double down on any of them to produce more income? For example, if your primary source of income now is affiliate marketing, can you find more products to promote or promote your most loved ones more often? Can you build your list bigger to create more income opportunities?
As you organize everything and set up your crisis plan, don’t listen to any bill collectors telling you what to do. The very worst thing that can happen if you plan is that you need to file for bankruptcy. Bankruptcy isn’t as horrible as it’s made out to be and can be a way to get a fresh start without losing your shelter and health.
The most important thing you can do now is create your crisis plan. Do you already have a crisis plan in place? Please leave any comment or questions below!
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