Theme: Coping With Financial Emergencies - Be Prepared
November 14, 2008Preparing for a financial emergency is often something difficult to do. Many people ignore this completely since they are living day by day just trying to make it. Having an emergency plan, though, will help to prevent trouble when something does happen. An emergency situation can cause big financial strain when you least expect it financially.
Many of us may not think about what would happen if we get retrenched or suddenly became too ill to work. It is a terrible thought, I admit, especially if we are living paycheck to paycheck with a job as it is.
Financial Emergencies can lead to Bankruptcy
However, reality speaks louder. You see, financial emergencies can happen to almost everyone at some point and they can have devastating impact to your bank account a huge financial disaster such as sudden retrenechment, huge medical bills, a lawsuit, or divorce. Even though this can happen to anyone, it is unfortunate that not many people are planning for this.
If you want to keep your credit score in good trim, you should know exactly what you would do in case of an emergency. It is as simple is drafting out a written plan where you can take action in the event of an emergency. Some items that could be on your financial emergency plan could include:
1) A list of all assets you could liquidate if you had to.
2) Listing out all the luxuries items that you can live without if there was a problem (i.e. magazine subscriptions, Internet cable, luxuries car, Friday nights at the movies).
3) A list of any resources you have that could help you in case of an emergency. For example, a lawyer who can deal with financial problems. Perhaps an insurance that you have been paying for many years. Maybe your employer offers a severance package. If you find these stuff, write it down. Keeping a list of these resources will make them easier to access in case of an emergency.
4) Other possible streams of income - jobs you could take, things you could rent out to others.
The bottom line is make a plan. Something must be in place so that when disaster strikes you can handle it without falling into a financial crisis. You will be stressed enough worrying about the emergency situation that finances do not need to drag you down too.