How to Efficiently Deal with a Financial Emergency

It happens to everyone at least once — just when you think you are on top of your finances and your budget is flowing smoothly, disaster strikes. The size of the disaster may not be huge; it could just be a blown tire during your tightly budgeted vacation. Or it could be as big as the loss of a job, a house fire or a disabling health condition. Whatever your financial emergency, you can get through it if you have planned ahead and prioritize.

A big part of making your budget is saving for the unexpected. Most financial experts agree that everyone should have an emergency fund of at least one month’s expenses. Ideally you should have savings and investments that could support you for six months or more.


Even if you are well set with savings to take care of financial emergencies, certain considerations will come into play.

* Redo your budget  

•  While the cost to replace a blown tire may be covered in your ongoing car budget, you might find yourself spending an unexpected night in a motel while waiting for the tire shop to open. Or the kitchen fire that is covered by insurance may put a jump on your plans to renovate, requiring some shifting of budgeted savings. If a sudden loss of income has occurred, the budget may have to be drastically redone to meet basic needs.

* Negotiate payments

• Call lenders and utility companies and see if a modification is available. Sometimes loans have built-in deferment options that could be available to you, or perhaps they can refinance to lower or put off a couple of payments.

• If loan holders aren’t at the point where they are likely to sue you, you may just have to ignore them for a couple of months. Utility companies will often take one or two bills and spread them out over the next year. This would help if it’s a short-term crisis, but may only make things worse a few months down the road if nothing has changed.

* Ask for help

• Consider getting any available help from the state or charities. Perhaps a new disability makes you eligible for Social Security or even food stamps. You can usually find help with groceries and utility payments at local food banks, social service organizations and churches.

* Prioritize 

• What expenses are most important? Always consider the roof over your head and the food on your table first. If that means your credit cards don’t get paid, so be it.

* Cut expenses down to the bare minimum

• You do not need cable TV to survive, so it can go. Eliminate extra phone lines, leisure activities, and non-work related internet service. Cancel subscriptions and memberships that are about to renew or have monthly payments. Be careful of the legal implications of breaking any associated contracts, though.

* Earn extra money 

• You may not be able to take on an extra job in your current situation, but chances are you have things in your house you could sell. Try Craigslist or eBay, or just have a big rummage sale. You may be surprised at how much money you could make.

These are a few of the ways you can make it through a financial emergency or flat-out disaster. It may seem impossible, but many others have walked in the same shoes before and come out on the other end stronger and wiser for it. You can make it through.