Bouncing Back from Financial Emergencies: Five Healthy Ways to Pay Back Your Debts

Emergency Expenses

It seems like an ordinary day. You wake up on time, get cleaned up and make yourself a cup of coffee before work. You’re out the door and it’s Monday morning as usual. But when you get into your car, it won’t start. You turn it over again and again to no avail. Turns out it’s a busted alternator. That’s $1,000 you don’t have. So, what’s the next step? Everyone will find themselves in a financial emergency at some point in their life — unexpected rises in rent, job loss, car repairs or medical emergencies. According to a 2017 survey, more than 50 percent of Americans have less than $1,000 in their savings accounts. So how do you bounce back from a financial setback? Here are five healthy ways to recover.

1. Tap Into Your Savings

Preparation is important. Ideally, those affected by a financial emergency would have an emergency savings account to tap into. Traditional savings accounts don’t penalize you for taking out funds and you won’t have to pay any of the money back since it’s yours in the first place. If you don’t have a savings built up, you could take money from your 401k. The downside is that an early 401k withdrawal warrants penalties. And, by taking funds from your retirement savings, you’re losing assets that could be used later in life.

2. Reach Out to Friends and Family

If you don’t have money saved, it doesn’t hurt to reach out to friends or family. Borrowing from a family member is beneficial in that you won’t have to pay interest and you personally know your “lender.” Don’t be ashamed to ask, either. Your loved ones have likely been in a similar situation and understand what you’re going through. Dealing with friends or family could lead to more open conversations about money, too, as a person may be more forthcoming with a relative than someone at the bank. If friends and family aren’t in a position to help financially, they might be able to direct you to financial counseling services or offer up other solutions.

Eliminate Unnecessary Expenses

Everyone likes starting their day with a Starbucks coffee. But eliminating a Frappuccino before work, along with cutting other unnecessary expenses, can help in times of financial distress. In fact, it might be a necessary measure. Revisit your budget and decide which expenses can be eliminated. Of course, you’ll need to account for groceries, utility bills and living expenses. But you likely could cut down on eating out, for example. A lifestyle change like this will not only help you pay back an emergency expense — it will also help you become better prepared for future financial crises.

Pick Up a Side Job

Pick up another job if you’re in a position to do so. This probably doesn’t sound like the most glamorous option, but a second job adds constant cash flow to your budget and can help you pay back emergency expenses quicker. And, more work doesn’t mean it has to be a traditional 9-5. The gig economy allows workers to use their skills on a flexible schedule. Check out some of these side gigs.

Create a Plan You Can Share with Creditors

Creditors want to know how you plan to pay them back. And they’re going to be more likely to adjust payment terms if you propose a payment plan that outlines your strategy. Say you need to pay back $400 in a month. How would you do that? If you can create a detailed plan on paper, creditors are more likely to make exceptions for you. Ultimately, a lot of your success will rely on your ability to be upfront and honest with people. Don’t tell them you can pay off your debt if it’s not true. But don’t be afraid to explain your situation and how you propose making the necessary payments.

Healthy Options

Unplanned expenses are inevitable, and, unfortunately, most Americans aren’t prepared for them. The five tips we’ve listed here are ideal because they’re safe, and they don’t expose consumers to predatory lending. Payday loan shops now outnumber McDonald’s restaurants in the United States. These unhealthy alternatives charge consumers exorbitant interest rates and create a cycle of debt that can become seemingly insurmountable.


Add Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

rapper busta rhymes reading speech
How Busta Rhymes Achieved a Net Worth of $65 Million
10 Things You Didn't Know About Rob Glaser
10 Things You Didn’t Know About Rob Glaser
How Steve Kroft Achieved a Net Worth of $17 Million
10 Things You Didn’t Know about EMCOR Group CEO Anthony Guzzi
Chase United Mileage Explorer
20 Benefits of the Chase United Explorer Credit Card
Brookfield Infrastructure Partners
Why Brookfield Infrastructure Partners is a Solid Dividend Stock
Welltower
Why Welltower (WELL) is a Solid Dividend Stock for the Next 20 Years
Chase Slate
20 Benefits of Having a Chase Slate Card
machine translation
How Close are We To Getting Machine Translation Perfected?
Flexible Electronics Technology
The Future is Bright for Flexible Electronics
Productivity 101: Why you Should Consider a Time Tracking Tool
Biosphere 2
Closed Ecological Systems: Can They Save the Future?
Exterior of Old Homestead Steakhouse NYC
Why The Old Homestead Steakhouse is One of NYC’s Finest Steakhouses
10 Things You Didn’t Know about the Staten Island Ferry
10 Reasons To Stay at The Ritz Carlton Amelia Island
National Museum of the American Indian NYC location
10 Reasons to Visit The National Museum of the American Indian NYC
1964 Ferrari 275 GTB-C Speciale
A Closer Look at the 1964 Ferrari 275 GTB-C Speciale
1961 Ferrari 250 GT LWB California Spider
A Closer Look at the $18.5 Million 1961 Ferrari 250 GT LWB California Spider
1954 Ferrari 375-Plus
A Closer Look at the $18.3 Million 1954 Ferrari 375-Plus
1964 Ferrari 250 LM Rear
Is the 1964 Ferrari 250 LM Really Worth $18.26 Million?
A Closer Look at the $4.6 Million Louis Moinet Meteoris
A Closer Look at the $4 Million Patek Philippe Platinum World Time
A Closer Look at the $3.3 Million Piaget Emperador Temple
A Closer Look at The Patek Philippe 1953 Heures Universelles Ref 2523