The financial emergency - Preparing yourself

The financial emergency - Preparing yourself

It can be pretty daunting task to do if we want to prepare for a financial emergency. Many people ignore this completely since they are living day by day just trying to just make it through with their earnings. Having an emergency plan, though, will help to prevent trouble when something does happen. An emergency situation can create major trouble when you do not have the finances to handle it.

Many of us may not think about what would happen if we get retrenched or suddenly became too ill to work. It is a terrible thought, I admit, especially if we are living paycheck to paycheck with a job as it is.

Financial Emergencies can lead to Bankruptcy

However, reality speaks louder. You see, financial emergencies happen to almost everyone at some point and they can have negative impact in your credit. In fact, a number of bankruptcy cases happen due to a huge financial disaster such as sudden retrenchment, huge medical bills, a lawsuit, or divorce. Despite this, few people plan for these problems, even though they can happen to anyone.

You need to know what to do in case of an emergency if you want to keep a good credit score. Developing an actual written plan can help you by letting you take action to save your credit as soon as an emergency occurs. Some items that could be on your financial emergency plan could include:

1) A list of all assets you could liquidate if you had to.

2) A list of all extras or luxuries you could cut out of your life right away if there was a problem (i.e. newspaper subscriptions, cable television, luxuries car, weekend shopping spree).

3) A list of any resources you have that could help you in case of an emergency. For example, a lawyer who can deal with financial problems. Perhaps an insurance that you have been paying for many years. Maybe your employer offers a severance package. If you find these stuff, write it down. Keeping a list of these resources will make them easier to access in case of an emergency.

4) Other ways you could get money if you had to - jobs you could take, things you could rent out to others.

The bottom line is make a plan. Something must be in place so that when emergency do happen you will not panic and start doing the unthinkable which can cause you to fall into a financial crisis. Having a good plan will allow you to stop worrying and you can also be prepared for any financial strain which you are prepare to do.

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