Financial emergencies are of a fact of life. Things will happen from time to time that stress even the largest budget. When financial emergences strike, it is important to address the problem before things get worse. The good news is that there are a number of options available for getting the money needed to address a problem.
The biggest mistake that people make when facing a financial emergency is doing nothing. A problem will not go away by ignoring it. People facing an emergency need to determine how much money is needed and when it is needed.
In some cases, creditors may be willing to reduce the amount that is owed, will accept payments over time or will give a person more time to pay. Talking with the creditor to gather information is an important first step to taking care of a problem.
A person facing a large bill needs to determine how much money he or she has available. A person needs to check the balances on checking and savings accounts, count cash on hand and determine available credit on credit cards.
Once the amount of resources is determined, he or she needs to subtract the money needed to live until another paycheck is received. Whatever is left over should be used toward settling the emergency.
When an emergency occurs, many people will not have enough money available to cover the cost of the emergency. There are a lot of different options for finding additional sources of income.
A person who has access to credit cards or other forms of credit can request a credit increase. Banks, credit unions and other financial institutions also provide personal loans, home equity loans and other conventional loans to those with good credit and collateral.
Many people do not have the credit history or collateral to borrow from traditional lenders. However, there are numerous options for those who cannot qualify for a bank loan. Pawn shops have been around for thousands of years. Items of value can be sold or pawned to a pawn shop or similar business. Title loans are another option that can be utilized.
Title lenders loan money against cars, trucks and other automobiles. Those who own a vehicle can quickly obtain cash from a title loan company. Cash advance businesses are another option. Cash advance companies, also known as payday lenders, loan money for short periods of time against a person’s upcoming paycheck.
If a person has borrowed money to satisfy an emergency, it is imperative that the loan be repaid according to the repayment terms. Failure to repay as agreed upon will result in late fees and more interest. Though lenders will allow you to refinance your loan, there will be costs to refinance. Repaying the loan on time will save money and help the person to be eligible for future loans, if they are needed.
Avoiding Future Problems
Once a financial emergency has been addressed, it is important for a person to plan for future issues. Putting a small amount of money each pay into a savings account is a great way to build up an emergency fund. Having an emergency fund can help people to avoid accruing more debt and paying more interest and fees in the future when money is needed on short notice.