Financial emergencies can hit us at any point, they are never easy to negotiate and when they do hit they can cause many a sleepless night. Periods of financial crisis can come in many shapes and forms; medical bills due to unexpected illness, a bill that you didn’t know was due or car repairs that are imperative to your work, to name but a few. In this age of austerity, any of these scenarios can be tricky to overcome, especially when all our purse strings are so tight. To help you in the immediate crisis and for future occurrences that may arise, here are 3 top tips for keeping you head above financial water.
1. Consider short term lending to help in a crisis
Short term loans or payday loans are both perfect in times of financial emergency, if used in the correct way. They offer you quick access to funds at a speed and amount that is right for your personal circumstances especially if you are looking for loans for people with bad credit. Here are the things to be aware of however, as this can be an expensive form of lending if used incorrectly.
Payday loans should only ever be used in a financial emergency, like those mentioned earlier. They can help to alleviate the pressure and also make sure you avoid the late fees that you could incur. They are only to be taken out on a short term basis, usually a period of 14-30 days, when the entire loan will need paying in full. Once you have decided that your emergency situation would be best sorted through the use of a short term loan, you must make sure that you know exactly how much you will have to pay back at the end of the loan.
The APR (annual percentage rates) on payday loans are very high, as they are only supposed to be used in the short term. So if you were to borrow $100 then you could be liable to pay back $120 once the interest is added. Knowing this upfront will help you to budget for paying the loan back.
2. Start budget planning in case of emergencies in the future
One of the most important things to consider when looking at our financial health is planning for future emergencies and times of struggle. Creating a set budget to start a savings fund for yourself and your family is the best way to ensure that you will always have access to money when it’s needed most!
Start your budget off by looking directly at your incoming cash, outgoings, debt and small spends each month. This will give you a clear indication of the areas that you can cut down on to save small amounts each month or week. This could be not buying lunch at work and taking a packed lunch instead. It may not seem like a lot of money, but it will all add up at the end of the month. According to Alison Griffiths of “Count on Yourself: Take Charge of Your Money,” the most important thing is to “get a real plan.”
“List every single debt you owe, both the monthly payment and the interest rate. It’s amazing how many people don’t know what the interest rate is on their various forms of debt. Include everything – student loans, car payments, what you owe mom and dad, all of that.” For the full article, check out CBC’s “Aiming To Be Debt Free in 2013.”
Once you have determined the exact amounts that you have, write down a plan. Having it in black and white is a great way to help you stick to it.
3. Make sure you have all you have everything up to date
This may seem obvious, but when disaster does strike you may need quick access to up to date records such as bank statements, insurance and medical insurance documentation. As we never know when disaster will strike, it is important to make sure that you have all this information up to date and at hand. Insurance is probably the priority here. If your house gets flooded or you need emergency medical care, you will want to make sure that you are covered for this, if not you could incur high fees and bills – not helpful and will only add to the stress. If you live in a area that is prone to disasters or burglary, then make sure this is included in your insurance.