Surviving Financial disaster

I have some big payments going out of my bank accounts today for insurance, but I was expecting them and have had all year to save up. Sometimes though, we do get unexpected emergencies and they can cause financial problems. It is a good idea to have an emergency fund for such times. I have money for emergencies and I could pay my insurance monthly or even put it on my credit card. I have options, but what when all the options are running out?

The first thing to do is make a list of all the money coming in and going out. Then you can prioritise the important things. The essentials, like housing. Usually housing will be at the top of your list, although paying down debt might be at the top. Especially if you have loans that are accruing high interest. If you have to pay off loans or credit cards, pay the ones with the highest interest rate first. Balance transfer deals are likely to get you into even more debt, but as a temporary measure they can get you out of trouble. You might transfer  debt to another card for a fee of around 3% and get interest free credit for 22 months and interest free purchases for 3 months. Treat it as a temporary solution, a breathing space to pay off your debts.

Housing is important, so make sure you pay your housing costs. You could consider taking in a lodger, maybe a student or a nurse from your local hospital. You should also make sure you are claiming any housing benefit and council tax benefit that you might be entitled to.

Food is important and so is energy. You can economise on both, buy food at discount stores or markets. Try to save energy, by turning down thermostats and take your time when you’re out. Do your shopping slowly, use the heat in the store rather than your own! If you can buy staple foods in bulk. You can buy a 25 Kg bag of potatoes where I live for £5.00 and that will make a lot of chips! You do need protein and eggs are a good source of protein and one of the cheapest. There are also cheap cuts of meat that might need extra cooking, but should be considered. Chicken is currently one of the cheapest. You can get chicken for as little as £2 a kilo, much cheaper than other meats. Eat what you need too, don’t waste food, don’t be greedy and have huge portions. Most people can half their food bill by shopping around and cooking sensibly.

You can obviously cut down on luxuries. If you have a phone contract, you might have to wait until it expires, but check it anyway. I try to make as few commitments as possible and avoid such contracts. We need to have some, I have a contract for my energy and landline telephone, but they are negotiable at the end of the contract. If you’re tied into a mobile contract that your can’t get out of, you might even consider giving up the landline if that contract runs out sooner.

Some addictions really drain your money. Cigarettes and alcohol are really hard to give up, but if you are in danger of losing your home, you might have to. It is better to go through nicotine withdrawal than lose your home. You might need the support of your family, so make the austerity drive a family thing.

Everyone’s circumstances are different, you might have to consider walking after owning a car. If you have children, there will be pressures to provide them with extra things at Christmas and so on, but be honest with them. They too can help you to save money and you can give them a financial education from an early age.

You should also get into money saving habits, switching off lights, looking after clothes, buying essentials and  looking after all your possessions more carefully. If you can only pay off debts slowly and then save a little. You eliminate the interest payments you pay and you become better off. When the banks are paying you interest, you are much better off.

If you make being thrifty and frugal a way of life for you and your family, you will all be better off permanently. It doesn’t mean giving up luxuries, it means being able to afford them without borrowing. Don’t forget to check to claim all benefits you’re entitled to and don’t be too proud to go to the local food bank or ask for a crisis loan.

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