Financial emergencies can strike at any time. As we’ve seen in the past few years, a global situation, like the COVID-19 pandemic, can upend our personal financial situations. Global shutdowns prompted mass layoffs, forced businesses to shutter, and halted the economy, leaving many people reeling from financial stress and uncertainty. No matter what the cause of your financial emergency, managing your finances with scarce resources may still feel difficult.
The good news is you’re not alone, and you still have a few options to help you weather the storms.
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Apply for government assistance
Your first step can be to see if you qualify for emergency financial aid from the government. There are many programs that assist with housing, groceries, small business support, and student debt relief. You should also look into whether you qualify for unemployment benefits or paid leave, which might cover a significant portion of your lost wages.
Contact your creditors
Asking for help from creditors may feel uncomfortable, but you should explore all your options during a financial emergency. If you’re having trouble making your credit card, loan, or mortgage payments, reach out to your lenders to inquire about obtaining some emergency financial relief. Be prepared to explain your situation clearly when speaking with your financial institution, as some banks offer temporary payment postponement.
You could also contact your landlord and utility companies to find out if they have a deferment or new payment plan. It bodes well if you have consistently paid your debts on time. It’s important to avoid damaging your credit health by accumulating late payment fees.
Redo your budget
Saving extra cash is critical right now. If you don’t have a budget, now might be the best time to create one; if you do have one, review it to find areas where you can reduce spending. Maybe you have a gym membership you’re not using or a cable package you can renegotiate. Plan your meals in advance. Take inventory of your pantry and refrigerator before going grocery shopping to ensure you’re only purchasing necessities and avoiding waste. Maybe some paid services such as house cleaning or lawn care can be skipped for a bit or eliminated altogether by doing the work yourself. You can use any number of budget tools or personal finance apps to track your spending and help you cut back or avoid overspending.
Safeguard yourself from financial fraud
Unfortunately, some fraudsters take advantage of financially vulnerable people during a time of crisis by offering quick-fix scams or by spreading false information. Financial exploitation is particularly prevalent among the older population. If you receive emails or calls offering financial assistance or requesting sensitive information, approach those with caution. Don’t click on links in suspicious emails or text messages ‑ reputable financial institutions will not solicit personal information that way. If you’re uncertain, protect yourself by contacting your financial institution for verification. Remember the old adage: if it sounds too good to be true, it probably is.
Consider a personal loan
If you don’t have an emergency fund and unemployment payments are not enough to cover your expenses, you can apply for a personal loan to help you stay afloat.
Start by calling your bank to discuss your options, and be sure to compare their personal loan rate with rates from other financial institutions. As with any major financial decision, ask about all the fees associated with the loan so you know exactly how much you’ll be paying by the end of the term. Remember that even though the interest rate may be low, this is still a debt that needs to be repaid, so take stock of your financial situation before taking on any new debt.
Pro tip: Discover® has a helpful online calculator to estimate how much a personal loan would add to your monthly budget.
A financial emergency can be stressful and emotionally draining. You shouldn’t be afraid or embarrassed to ask for help. A personal loan can be a valuable lifeline. With Discover, you can see what your loan rate and set regular payment could be before you apply with no impact to your credit. Take a look and consider the potential benefits this could offer you.
Learn more about creating a plan to work your way back to financial health, day by day.Read More