Being a homeowner can make you feel tempted to use your home as instant access to cash. We do this by accumulating a high amount of debt, and then we would take a visit to the bank and take out another mortgage or refinance the home in order to pay for the debt. This is done so much that one example shows a couple who had done it five years in a row. However, when they approached their bank the sixth time, the bank denied their request. Why? Because they had managed to completely mortgage their home and their combined incomes had decreased. So it became impossible to take out another re-finance in order to cover their debt.
With that said, what tips can be implemented in order to survive a financial crisis? Below, we have the top four that are the most important.
Take Credit Out of Your Life
This tip is never an easy one. This is especially true if you have used credit your entire life. You may not even know what it’s like to use cash to make a complete purchase.
Being able to take credit out of your life translates into knowing how to plan and budget for things that you want and being able to put aside money for it. This could be too difficult for some who have become accustomed to making payments in order to have what they want now; however, for the long term, it might be just what you are looking for once you see the amount of interest earnings that have accumulated on top of what was saved.
Debt Reduction
Being able to reduce debt allows you to remain in control instead of your creditors. If you are currently not in control, then you need to make a plan that allows you to reduce the amount of debt.
Having no debt makes your financial life so much easier. If a job loss occurs, the only thing that you’ll need to concern yourself with is another job hunt. Having to worry about making payments will be nonexistent, and this means clear sailing through any financial storm.
Incorporate a Backup Plan
Sure, your personal finances may not have changed, however, the financial world has made tremendous changes that could soon engulf your own. Being able to know what to do if you get laid off from work is important. Would you be able to afford another car when it’s time to upgrade? What would you do if the economy collapsed today?
Sure, no one likes to think of these things, but it is a reality that could easily happen which is why having a backup plan is so important.
Decrease Expenditures
The worst thing you can do is wait to decrease your expenditures. You need to get into a habit where you can cut them now. Once you do, you will have a bit of extra money in your pocket that you can use to pay off your debt.
For example, let’s say that you bring home $1,500 monthly, but you need $1,500 to make it to next month. This provides you with no margin. However, if you were able to decrease your expenditures to $1,000 monthly, then you’ll have an extra $500 that you can save. You can easily implement strategies to decrease expenditures. If you don’t know where to start, here are a few that can get you started:
- Remove a home phone service and maintain a cell phone
- Decrease the number of times that you need to take a trip to your coffee shop. Brewing your own is just as good if not better because you control the strength and you can make any type that you like. You can also obtain your favorite coffee from your coffee shop and brew it at home, that way you never miss the taste. With so many coffee maker models available, there is no reason why you can’t program yours so that your coffee will be brewed before you wake up in the morning.
- Make a list of errands that you plan to accomplish for the week and complete them all in the same day. This will save you at the pump.
No, money problems are never easy. With some smart planning, you can get on top of the money woes and have smooth sailing through almost anything.
I’m a 20-something stay-at-home mother and wife. I have an amazing husband, a beautiful daughter, two loving dogs, and a lazy cat. I wouldn’t change my life for anything! I love to read, listen to music, cook and blog!
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