"Life comes at you fast," Nationwide insurance company reminds us with their television commercials. In the blink of an eye, we can move from fiscal fitness to fight-or-flight finances.
Whether your financial situation is interrupted by loss of a job, divorce, illness or other unforeseen circumstance, the most important element to financial survival in a crisis is cash-flow preservation. Here are some tips to help stretch your dollars while enduring a financial hiccup.
It almost goes without saying that you must cut out unnecessary expenses, but think beyond weaning yourself off your daily latte to include "fixed" household bills and personal care. Can you: Cut back on your cable package for a few months? Wait a couple more weeks before having your hair cut and colored? Freeze your gym membership and exercise at home for a little while? Remember that generally this is only a temporary situation, so it’s not like you’re giving yourself a permanent lifestyle makeover. Evaluate each expense to see if you can survive without it for a while.
While you should try to eat at home as much as possible, you may be unable to avoid dining out under certain circumstances. If you must go to a restaurant for a meal, pay attention to the prices on the menu and consider ordering off the appetizer menu and trading your soda for water. You will be surprised at how much restaurants charge for a fountain drink!
Take a hiatus from aggressively paying down any debts, and just pay the minimum balance due to save cash. Make sure that you continue to pay on time, though, as even one late payment can compromise your credit score for years to come, which can have long-lasting consequences. Remember that as soon as you get back on your feet, you should resume where you left off with decreasing your debt.
If you or your spouse is contributing to a retirement savings plan through work, consider reducing the contributions temporarily to add to current cash flow. Just make sure that when you exit financial-survival mode, you return to the previous savings level as soon as possible.
Reduce utility bills by setting your thermostat a few degrees warmer in summer and cooler in the winter, and make sure you turn off lights when you’re not in a room. Also save water by turning off the faucet when you brush your teeth and try to take shorter showers. Look for other ways to reduce consumption as well.
Clip coupons, but make sure that you’re only clipping for products you already buy. A 50 cent coupon for a high-end item may seem enticing until you compare prices and see that it will still cost more than a similar product with a different label. Read the "per unit" labels at the grocery — this is the best way to compare prices as products come in different sizes.
Above all, remember that this too shall pass, and concentrate on the big picture. Try not to spend money on anything unnecessary in order to set yourself up for the quickest recovery possible once things turn around. You even may find that shifting gears toward financial survival leads to thriving over the long term. My personal experience actually has been that a financial crisis always has led to a better life situation on the other side!