crisis

How to Deal with an Impending Cash Crisis

If you have ever had a cash crisis then the way you dealt with it will have determined how quickly you got over it. We all deal with situations like this in different ways but what are best ways of handling it?

Don’t Bury Your Head in the Sand

The worst thing you could do when you see financial problems on the horizon is bury your head in the sand and try to ignore them. I guess you already know that but it is still the natural reaction for most of us in this situation. I have to admit that when I was in my worst ever financial state I didn’t open my bank statements and just kind of hoped that the whole thing would sort itself out. Of course it didn’t. That’s the thing about money worries; they nearly always need you to do something in order to sort them out. By trying to ignore what is going on you run the risk of making things worse. Every month in which you don’t check your bank account and credit card you could be paying extra charges unnecessarily. It can take a real effort of will to open an envelope which you know contains bad news, but it has to be done.

Get Advice

It can be quite embarrassing to be in debt, can’t it? I was terrified of telling family and friends about my financial problems. That was a few years ago and it should, in theory at least, be easier to look for advice now. We keep reading statistics and reports telling us that more and more people are facing serious problems with their debt. This means that you probably know a few people who have been through a financial crisis of their own, even if you know nothing about it yet. The difficult part is starting a conversation about a touchy subject like this. Once you do you might be surprised to find out how much useful advice you can get in this way. If you don’t feel ready to speak to a friend or family member about this issue then you could turn to a professional debt advice counselor to help you out. You are sure to feel a lot better about your financial future after doing this. Giving advice to other people can also help you think about your own issues with a clearer head.

Be Creative with Your Solutions

Sometimes sitting down with the facts and figures and looking for a creative solution is a great move. Maybe you could switch to a lower interest credit card, get a second job, sell some stuff or do something else which helps you out financially. You shouldn’t discard any idea which comes to you without first of all considering it carefully. The more creative you are and the more ideas you can come up with the more chance there is of you finding the ideal solution. There are sure to be a number of different solutions which could suit you, so don’t just leap onto doing the very first one you think of.

Don’t Panic

Panicking because you are facing up to a financial crisis is one of the worst things you can do. The cooler you are the more likely you are to find a way of avoiding it turning into something which affects you too badly. Rushing out to get a re-financing loan or putting your home up for sale too quickly are a couple of the panicky decisions you need to avoid making. Take your time and make decisions which are going to make your future brighter and more financially stable in the long term.

What other advice would you give to someone in this situation?

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12 Responses to How to Deal with an Impending Cash Crisis

  1. My favorite advice for this type of situation is this: when you find yourself in a hole, stop digging! That is, stop using credit cards or doing whatever it is you are doing that is ruining you. Then as you said, you will often need some creativity and a lot of hard work to start making your way back out of the hole.
    Dee @ Color Me Frugal recently posted…Color Me Frugal is joining the Yakezie Challenge!My Profile

  2. I think ignoring is one of our biggest mistakes in the past. It’s so easy to just let things go until they build up enough.
    Michelle @fitisthenewpoor recently posted…Friday Blog Roundup #3My Profile

  3. Many credit card issuers are willing to put cardholders facing a temporary cash crunch on a “hardship plan.” Typically, your APR would drop and your minimum payment would be cut while you’re on hardship. This might make the difference between staying current on your debt or not. Worth a shot!
    Kurt @ Money Counselor recently posted…Pay Rent with a Credit Card?My Profile

  4. Good article with some very solid advice. I believe the same tactics also work well for a lot of non-financial challenges we face in life. Avoiding the mail box is a classic symptom – “out of sight, out of mind.” I recently posted an article that specifically helps people overcome this challenge by getting their financial paperwork organized: http://privatequote.com/blog/kill-the-chaos-how-to-organize-your-financial-paperwork/

  5. SavvyJames says:

    Great list, particularly the first and third tips. When speaking about retirement planning, I often advise people to first assess their situation, being honest about the depth and breadth of the scope. Being open – and creative – to different solutions is a great way to come across the best solution for dealing with a crisis.
    SavvyJames recently posted…Your Rendezvous With RetirementMy Profile

  6. I would likely say to just create a plan of action. Without the plan nothing will fall into place. You can talk until you are blue in the face but without that commitment and plan nothing is given the green light.
    canadianbudgetbinder recently posted…Meatless Stuffed Parsleyed OnionsMy Profile

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