What To Do When You're Not Prepared For A Crisis
I wrote recently about how to prepare in advance for a financial emergency to limit the pain you experience. But what if you’re already facing a crisis that you weren’t prepared for?
Don’t borrow money.
Whether your crisis is an acute situation, like a car repair, or more ongoing, like being laid off from your job, I would never recommend going deeper into debt during a crisis. While it may seem like an easy fix, borrowing money only turns a short-term situation into a long-term one. Whatever the situation is, you want to get through it and put it behind you. If you rack up credit card debt or finance a new car you could be paying for this emergency for years. I would much rather sell something or pick up some odd jobs to scrape together some cash.
If we’re not going to borrow money then the resources that are available have to be directed where they’re most needed. It’s all about ruthless focus on these survival needs:
Food - You need to eat every day so food is at the top of the list. Whatever money you can get your hands on should go here first. No eating out during a crisis. Just the basics from the supermarket.
Utilities - It will usually take longer for the power and water to be cut off than it will for food to run out so this is your second priority. I would probably also try to keep the internet and phone turned on but cable TV packages and Netflix should be paused until the crisis passes.
Shelter - Once food and utilities are covered you can pay the rent or mortgage.
Transportation - Finally, put gas in the car and keep it in repair so you have a way to get to work.
You can also tack on a small amount for basic clothing but normally the clothes you already have will last long enough to get you through your emergency.
Taking care of these necessities will keep you in the game financially and emotionally. Once you run out of food or the water gets shut off it’s a much bigger mental challenge to stay on top of the situation. NOTHING gets paid before these four things are covered. This means that credit cards and other debts will have to wait. Make sure you communicate with your creditors, though, and let them know your situation. It’s even a good idea to send them a copy of your budget.
Don’t accept your fate.
It’s frustrating when an unexpected problem interrupts your routine but ignoring it won’t make it go away. You have to own the situation and go into warrior mode. If you get moving and get aggressive you can always find something to sell or some way to shake things up and get some money flowing.