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7 Ways to Bounce Back from Unexpected Financial Emergencies

Financial emergencies happen to the best of us. While we cannot prevent or predict them, we can find positive ways to bounce back rather than letting them ruin our lives. When you know how to handle the most common setbacks, you can bounce back quickly, making the most of a bad situation and push forward, making for a better future.

Losing your Job

Losing your job is mentally and financially draining. The first step is to reframe your budget. Now is not the time to max out your credit cards; instead, find ways to trim the fat in your budget, paying only for necessities. Cancel frivolous things like Starbucks trips, magazine subscriptions, and gym memberships. In addition, find part-time work to get you through until you have a more solid income – a little bit is better than nothing. If you are unable to meet your minimum loan payments, try to negotiate with the lenders for deferred payments in a time of trouble.

Getting Divorced

Going through a divorce will not only deplete you mentally but can also be devastating to your finances. Before you let the drama get to you, take these important steps to get your finances in order. Start by separating all joint accounts right away; close joint savings accounts and cancel credit cards you may share. As you move forward, consider what is important to you. If that big house payment is not affordable, work the house into the divorce settlement. Moving forward, think of it as a new start; figure out a budget with the important things in mind. Make your short and long-term goals focus strictly on yourself and move forward – do not compare your new life to your old; consider this a fresh start.

Bankruptcy

Bankruptcy is a common financial emergency today. If you need the fresh start, take it, but make sure to start your new financial life with a keen eye for what is right. If you jump right back into credit cards, car payments, and mortgages you cannot afford, you will not bounce back. Instead, keep only the bare minimum debts, giving everything else up. As you gain your financial footing, apply for one secured credit card and only charge what you can pay off that month. Keep your bills within the budget you can afford – don't extend credit to yourself because that will only create the snowball effect you already experienced.

Medical Emergencies

When medical emergencies strike, life can turn upside down. Not only are you in the hospital and unable to work, chances are the medical bills will pile up beyond control. Start by contacting your insurance company to see what they will cover. Don't just assume the Explanation of Benefits they send is the final say – call and ask questions, sometimes situations are coded wrong or paperwork is missing that stops you from getting the coverage you are entitled to receive. After insurance pays, you can negotiate with the hospital to arrange for installment payments, lump sum discounts, or other financial arrangements based on your situation to avoid financial destruction.

Fire

When fire strikes, everything changes in your life in the blink of an eye. Before you let the reality of the situation settle in, take charge of your finances. After you contact your insurance company, contact all interested parties that bill you for their services that you will no longer need for the time being. A few companies include the electric, gas, and mortgage company. If your home is not livable, you do not need to pay for these services. When it comes to your current debts, talk to your debtors about the situation to see what type of relief they offer for these situations. You will not know what you can receive until you ask.

Death of a Spouse

While you never want to think of losing the one person that means the most to you, it is something we need to understand how to handle financially. If you have life insurance, make sure to set an appropriate budget so that you can use the money wisely rather than blowing through that large lump sum of money. You also need to make sure you have a handle on all investments, savings, and debts you have in the marriage. Just because your spouse is gone, does not mean you are not liable for the debts. If you let the debts go, you could find yourself in more financial trouble. Enlist the help of a professional to help you understand the depth of your situation.

Freak Accident

Accidents happen everywhere – on the road, at work, and just while out and about. If you are laid up, you have changes to make in order to stay financially fit. Start by collecting any insurance payments you are entitled to receive and then set an appropriate budget to make it last. Don't pay any large amounts due up front; instead, negotiate with all debtors to see how they will work with you. In addition, get rid of any unnecessary expenses, such as subscriptions for luxuries you cannot use for the time being. Go through your budget with a fine-toothed comb to trim it down to necessities until you get back on your feet.

Financial disasters can alter your life, but it does not have to be for the long-term. Get the help you need to figure out the situation so you can make the most of a bad situation and move forward.