First things first: take a breath.
If you recently received a big bill that threatens to eat up all your available cash, you know how fast stress and fear sets in. But don’t let these feelings paralyze you. As dark as it may seem, you still have options.
So breathe deep, and get ready to meet your problem head on. Here are five helpful tactics to consider when tackling your money emergency.
1. Find immediate ways to save
You need to free up some cash—fast. If you don’t already have a budget, access your checking account statement and review your expenses. Are you spending money on things that you don’t really need? Do you eat out a lot? Have an expensive cable bill?
Tighten your budget ASAP. If it’s a true emergency, you may need to make some tough decisions, but having the extra cash will be worth it.
2. Ask a relative
Before you max out your credit cards, do you have a relative you can ask for help? Obviously, you need to pay them back in a timely manner, but the so-called Bank of Family typically has more flexible terms than most financial institutions.
But remember this—some people draw a line at mixing family or friends with finances. So make sure you have a secure relationship with the person, and be honest about your ability to repay when you ask to borrow money.
3. Use credit carefully
If putting your emergency debt on a credit card or getting a personal loan is your only option, be careful. You may get immediate relief, but high interest rates can dramatically increase the size of your debt.
Pro tip: if you’re applying for a new card, try to find one with a zero-percent APR intro rate, and pay off the debt before the offer expires.
4. Be wary of payday loans
Payday loans can be a quick way to access money if you have bad credit. However, like other lines of credit, they can be expensive—really expensive.
These types of loans are notorious for gouging consumers with sky-high rates. In other words, you’ll end up paying much more than your current balance in the long run. And if you miss a payment, the fees aren’t pretty.
5. Seek counseling
Remember, you’re not alone. No matter how helpless you might feel in a money emergency, there’s always help. Certified Financial Counselors can assist you in making a plan and can identify the most productive ways to save, and review the best options for paying off your debt.