If we only knew when a financial emergency is going to strike, we will be prepared for the consequences. However, such problems often arise out of the blue. A job loss or a medical emergency are just a few ways in which you could end up spending everything you have in just a few days. If you are stuck in a situation like this, your primary agenda should be minimizing the damage on your finances and find the best way forward.
Analyze the situation
Not all financial emergencies are the same. To navigate your unique situation better, try to analyze how exactly you got into this problem and what can be done to overcome it. Some damage to the finances is inevitable. Even if your insurance payment kicks in for a medical emergency, you will have to pay a deductible or a co-pay. Sometimes, prescription medicines and certain specific procedures are not covered in insurance policies.
Is debt an option?
Most people are afraid of debts in situations like these. However, short term advances could become a boon for them. If your financial condition is strong otherwise, visit https://www.luckyloans.co.uk/ and find a suitable credit for yourself. They provide loans on bad credit at very reasonable rates. Check if you can find a quick loan from here. Generally, these short-term loans do not pose a huge burden on your finances. You can always pay them back when your next paycheck arrives. If the situation still looks grim, you can make a minimum payment and carry over the debt to the next month, just like a credit card.
Tapping into savings
If you don’t want to use any credit instruments, your only option is your savings bank account. This method works only for those who have sufficient funds to furnish all their bills. If your financial situation wasn’t particularly noteworthy before this emergency, this option will be out of the question for you.
Those who had a good financial standing before could get easy cash at zero rate of interest. We would like to advise you against using these funds. For rainy days, you should create an emergency fund in a separate, high interest paying savings account. Whenever you are in a problem, utilize the savings in this fund first. It should ideally have 3 to 6 months of expenses saved for bad times. Use your regular savings account only when this money has been fully utilized.
Tapping into investments
It is not a very vital step to use your investments for furnishing your bills in case of an emergency. However, in desperate times, your money should not become inaccessible. First, try to see if you can sell some stocks, mutual funds etc. quickly at reasonable market rates and get a good price. It doesn’t make sense to sell anything you have held for a long time at a throwaway price.
If that is not an option, check if your retirement fund or pension fund allows a hardship withdrawal. If yes, then go ahead and get some money from here. Make sure to refill this amount to the fund as soon as you can.
These were a few ways in which you could get by hard times. Remember, it is always better to be prepared. Start an emergency fund now.