Wherever there are cash flow woes, you can be sure to find crippling emotional set backs. You might as well begin to prepare for the devastating fiscal and the emotional fallout that is sure to come. You will need to cope very well with both if you hope to make a solid financial comeback. Which is very easy to do, if you pay attention to the title and not Panic. Whenever a cash flow or monetary emergency hits, it will be in your best interest to deal with the cash flow emergency in a calm rational manner that way you have a nice clear head to think with. It is when a series of financial hits come your way that the stress will tend to accumulate and make your life much more difficult to cope. You will not be so overwhelmed when you can calmly and rationally look at each individual problem as it arises. If you sit back wringing your hands with worry and allow all of your emergencies to pile into one; you will find yourself down for the count.
Calm must always take center stage. You must NEVER allow yourself the luxury of panic. The more you panic, the less effective you will be in that you can’t think straight. You have to be able to think logically and clearly. You need to keep a very clear head to be able to sit down and come up with an appropriate plan. Again I must re-iterate it is only when you are at your most calm that you will be prepared to get to where you need to be so you can overcome your cash flow emergency.
At even the first hint of cash flow emergency, it’s important not to act right away as most likely you are panicking ( happens all the time). If you do you will inevitably make a mistake! First, before you can manage your finances again, you have to first manage your emotions. You absolutely must regain your balance before you can even begin to make a plan. If your money emergency demands that you act quickly, think first about seeking the advice of a debt counselor, money coach or financial planner. Whenever possible think about seeking out the aid of a financially perceptive friend or family member who can help you to come to a clearer perspective. Remember the old adage that “two heads are always better than just one!” You won’t need to make major cash investment if you’re strapped. Look for a planner who will give you a one-hour consultation for a small amount. Often times this will be all you will need to securely turn the corner.
Now if you don’t need to act so quickly and hastily, then you can think about getting back on track and crunching your numbers. Or checking out other legitimate opportunities (see link below). First, you need to know exactly how much you owe how much money you have in hand and what it will take to cover the distance between the two. Second, you will want to avoid any other mishaps, such as penalties, further repairs, missed deadlines, etc. If you are not properly prepared, you must become prepared on the spot. Any type of money crisis will catch you unaware and you will feel cornered. Wouldn’t it be ideal to be ready and waiting for the crisis? How likely is this to happen to you, though? Most people will be at least somewhat prepared. If the crisis is not too dire, they will be able to handle it OK. Some will be sunk from the get go. The idea is to not be overwhelmed and to have a good plan of action, no matter how little or how a lot. You need to be entirely prepared to deal with any sized setback. Ideally, those unexpected expenses could be covered by the funds in the Irregular Expenses account in any good budget. Unfortunately, though, there is always a common problem. You might well have an emergency stash-but it’s most often depleted. This same problem affects the majority of us so take heart. At about this time many people make the mistake of turning to plastic for relief. Resist this one. You will only be transferring your problems from one pocket to the other.
On the other hand, if you are sure you can handle using credit cards to deal with a cash emergency, you had better be sure you could pay them off when the time comes. Otherwise, why add yet another debt and another problem. Eventually, it will all catch up with you. If you’re truly running while on your last leg, consider taking out a home equity line of credit. This will work for some. The interest is tax deductible, but those aren’t fixed rates. Be smart about this remedy, though. Unless you plan to pay back the amount you borrowed promptly, it can end up costing you more than you thought-especially if you’ve already depleted your own equity. Think well before borrowing from your 401(k) or IRA. There are loopholes that allow you to do so, but there are also hidden costs-never mind potential taxes, penalties and other consequences. Keep in mind that if you were to lose your job, you’d have to repay the loan immediately, or be taxed as though it was a withdrawal. This remedy could be very costly in the long run. So as you can see dealing with cash flow emergencies if handled with calm and if there is a plan can easily be dealt with without turning your life upside down.
