If you answer yes to any of the following questions, then this post is for you!
Do you own a home?
Do you drive a car?
Do you have children?
Are you a college student?
Do you go on vacations?
Do you exercise?
Are you breathing?
Yes?
Okay good!
Then Murphy will probably come knocking from time to time! Who is Murphy you may ask? Well, Murphy brings bad news, often times in the form of financial hardships. He usually isn’t welcome and we often wish we could just send him away. However, it’s better to deal with him immediately rather than letting him linger on and on. Unfortunately, he sometimes comes back again and again over a short period of time. Have you heard the phrase, “Bad luck comes in threes?” It’s so true! We’ve experienced this several times in our 6+ years of marriage.
When financial hardships strike, we need to be prepared. Maybe it’s the dead of winter and your furnace goes out. Or you have a long trip planned when your car goes on the fritz. Maybe you have to make an emergency room trip with your 3 year old after he busts his eye open on a closet door. Or your new puppy goes on a rampage in your kitchen ripping up your vinyl flooring while your gone one day. (Yes, all of these things have happened to us!) Whatever it may be, you have to deal with the situation so you can move forward.
There are 5 steps to take that can help you overcome these financial hardships. If you follow these 5 steps, you will be able to tackle the problem, reduce your stress, and move forward quickly to (hopefully) much better things!
1. Take Responsibility
It’s important that you start out by taking responsibility. It may not be something you planned for or wanted to happened. However, we have to remember that all of our actions and decisions have consequences and unfortunately possibilities.
If we purchase a home, there are endless things that could go wrong. We own the home, so we own the problems.
If we own a car, we own the problems that come along with it.
If we have a child, we are responsible for caring for and providing for that child.
If we have a pet, we have to accept responsibility for the things that pet may do.
If we go on vacation, we may have unexpected expenses.
There are always possible consequences to the decisions we make in life. Don’t play the blame game with your spouse. Don’t point fingers at who caused the problem. It’s here. It happened. The first step is taking responsibility for the decisions you {and possibly your spouse} made and move forward.
2. Temporarily Cut Expenses Drastically
Depending on the financial requirement of what’s happening, you may need to temporarily cut your expenses to cover the costs. Lydia from Frugal Debt-Free Life was able to save $6000 in 6 months to cover the cost of the new roof her family needed on their home by drastically cutting expenses. It’s not fun, but it can be done.
A few ideas of expenses you may have that you can cut or reduce include:
- Cable/satellite television
- Restaurant Trips
- Grocery Budget
- Car trips to cut your gasoline budget
- Clothing
- Entertainment
- Allowance
Maybe you are paying down debt and you need to step back for a month or two to cover this big cost. As painful as that seems, it’s better to pay the minimum payment on a debt to cover an unexpected cost, rather than go further into debt to cover Murphy’s visit.
3. Increase Your Income
Depending on the amount of money you need to cover the cost of what is happening, you may need to consider increasing your income.
There are many ways you can increase your income for the short term. You could pick up a second job or work from home if you are a stay at home mom. You could babysit during the day or evening. You may be able to work overtime at your current job. Look around your house. Are there items you could sell that you no longer use that could help to cover the cost of this expense?
Finding ways to increase your income {at least for the short-term} can really help to alleviate the financial strain that unexpected expenses can put on your life.
4. Make a Plan
Are you going to decrease your spending or increase your income? Maybe you are going to do a combination of both. Whatever it may be, you need to have a plan in place.
Put your plan down on paper. Make a budget and live off of it. Create a plan and put it into action so that you can cover the unexpected expense that has come your way.
Thinking about it is not enough. Having a discussion about it won’t do the job. You need to crunch the numbers, step foot into reality, and physically write out your plan to cover the cost in order to make progress.
5. Stay Positive
Negativity will get you nowhere. Setbacks are just that…setbacks. They aren’t the end of the world. By staying positive in the midst of the chaos, you can begin to see the learning opportunities. What could you have done differently? What do you want to do next time? Looking at the situation as a learning opportunity will help you stay positive and move forward.
While it goes without saying, the best way to cover unexpected expenses is by having a fully funded emergency fund in place. Dave Ramsey recommends $1000 if you are in the process of paying off debt. However, I don’t think this number is enough, especially if you are a home owner or have children. I think that you need at least $2500-$3000 at minimum in an emergency fund. This amount would cover most of the unexpected expenses that may come your way. With that being said, you should have a number that you are comfortable with in your savings.
Murphy will come. He doesn’t call to let you know he is on his way. When he arrives he can easily turn your life and your bank account upside down. Are you ready for him?