When Life Happens: Smart Ways to Handle a Financial Setback

CleverDude_FiverrPicMany people are blindsided with unexpected expenses. But, it’s the way you handle these setbacks that make all the difference. Here are some helpful tips for dealing with financial trouble.

Round Up Friends And Family

Friends and family are (theoretically) there for you in your darkest hour. When they’re in trouble, they probably come to you for help. Now it’s their turn. See if you can borrow money from anyone you know. Yes, there is a danger in doing this. You might damage relationships if you don’t pay them back.

Bottom line: borrow and pay them back.

Ask For Money Elsewhere

If you can’t get any money from friends and family, maybe you need a loan from a financial institution like Direct Axis. These loans are short-term and are meant to be paid back within a year.

If you have a one-off expense that you need to pay for, a loan might be the best option you have. Ask about the lowest rate you qualify for, don’t borrow more than you can afford, and try to keep your total debt burden under 30 percent of your income.

For example, for every R1,000 in income you make, your total debt payments should not exceed R300.

This will keep you out of financial harm’s way going forward and make it easier to pay back the loan. Sometimes, this just isn’t possible. If it isn’t, you will have to work harder to pay off your debts.

Work Overtime

Working overtime is probably one of the more straightforward ways to earn extra money. It’s not always pleasant, and you might get burned out if you’re working every weekend with no break. But, if you’re willing to put in at least 2 extra weekends a month, staggered, you might just come up with the extra money you need.

How To Get Crazy Frugal

Getting frugal is one way to reduce your expenses. This is a great strategy if your problem is your expenses. A lot of people spend way too much money, plain and simple.

Cutting back on expenses would mean creating a budget, sticking to it, and finding ways to eliminate waste.

For example, you might create a food budget with the goal of eating healthy without spending a lot of money. Set an upper dollar amount that is at least 50 percent less than what you’re spending now. Impossible? Unless you’re already living on rice and beans, probably not.

You will need:

  • A source of protein
  • Vegetables
  • Fats

Protein is easy. Canned tuna and eggs are cheap sources of protein if you need meat in your diet. You can even spring for ground beef or chicken breast once in a while.

But, don’t overlook vegetarian sources of protein which are cheap and satisfying. Beans and lentils are prime examples, and it’s difficult to go wrong with either choice. There are so many dishes that you can make with them, you really shouldn’t have too much trouble coming up meals every week.

Vegetables can be expensive, but that’s truer of fresh fruits and only then when they’re out of season. Of course, greens tend to be on the pricey side if you’re buying organic too and that’s because there’s not much substance to things like kale and lettuce. They’re mostly water. But, if you’re buying things like potatoes, sweet potatoes, peas, and corn, you’re eating cheap.

And, if you’re willing to buy vegetables in season, you can score really good deals on traditionally expensive items like squash, pears, strawberries, and peaches.

For fats, go nuts. Literally. Nuts are some of the best sources of natural fats you’ll find. They’re loaded with protein and some carbs too. Mineral warehouses, you don’t need to eat a lot to get a lot, which is good because they tend to be expensive by the pound. Thankfully, a handful a day is usually all you need.

Start Saving Money

When you’re out of financial trouble, do this: start saving money. Take the old debt payments that you had, and start putting that money away. If this was a one-off expense, then it’s time to start rethinking your financial life and career.

Why were you vulnerable to this financial setback? Sure, maybe it wasn’t directly your fault, but why didn’t you have the savings to cover it? If you had savings, why was it not enough?

Sometimes, there’s simply nothing more than could be done. Other times, you have a shortfall because you’re not saving enough. It might be time to rethink your job, go back to school, or start cutting expenses rather dramatically so that you can make up the difference in savings.

Going forward, the goal is to never be caught off guard again.

Samuel R. Carl is a bookkeeper. He likes to write about his money insights on the Web. His articles are available mostly on financial and money websites.

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