What Should I Do When I've Almost Run Out of Money?
My family is seriously stretched thin for cash. Our credit cards are nearly maxed out and we wiped out our savings when my husband was laid off and then we had expensive medical bills. What can we do to get money fast and back on our feet again?
First of all, we're sorry to hear about your predicament. This is an unfortunate situation that can happen to anyone, whether it's because of a lost job or another misfortune. It's time to go into financial survival mode. Here's a three-step plan to help you focus on the most important things now: preserving the money you still have as much as possible and finding other sources of income.
Step 1: Take Stock and Prioritize Your Spending
Take a deep breath, then take a hard look at your income, expenses, and debt, if you haven't already. The National Foundation for Credit Counseling has an online budget worksheet to help you tally everything up.
For your debts, separate them by those that are tied to collateral (your house or car loan, for example) and those that unsecured debts (credit cards, doctor's bills, any other loan that doesn't have a collateral).
Which Bills to Pay First
When money's really tight there are some bills you can let slide for a while, and others that you should keep on paying if at all possible. The ones you should pay first are the ones that would affect your family's health and security the most:
- Rent or mortgage payment: In some states, landlords can kick you out if you're even one day late on rent
- Essential utilities: gas, electricity, and water
- Child support: If you stop making those payments you risk losing custody rights and could even end up in jail
- Income taxes: Never mess with the IRS
- Insurance: It's too risky to go without medical, auto, or home insurance
- Car payments: If you get behind, the lender could take your car and your credit score will drop
- Any other secured loans
- Student loans
Even some of these are negotiable. If you owe taxes, for example, you can contact the IRS for a monthly repayment schedule. Most utilities have programs that help services stay up in times of hardship. And if you have a federal student loan, you could have the payments deferred-as long as your loan isn't in default.
Although it's not the best tactic, paying just the minimum on your credit cards can help you get by; just make sure you put the cards away and stop using them. Also, if you can qualify for a 0% balance transfer offer, you might be able to reduce your interest payments, but you'll need to calculate if it's worth it
Cut Your Existing Bills
You've probably already done this, but just in case, go through your budget and ruthlessly strike out everything else that absolutely isn't necessary, such as the cable bill, gym memberships, and other non-essentials. (Even internet access might not be necessary, but that depends on your job.) This is your new emergency budget, but we can tighten it up even more.
Then call your bank, credit cards, and wireless bill to negotiate better rates. These calls can save you a few hundred dollars a year. Just about any kind of bill
Step 2: Trim Your Most Expensive Spending
Housing: We spend the most on housing, transportation, and food
Transportation: Do you really need a car for work or the second car? Using alternate transportation could save you thousands.
Food: It's possible to eat well on just $1 a day
- Eat food with the densest nutritional quality, like brown rice and beans. (Learn to cook like a peasant
- Know the pull days at your grocery (when they reduce items for clearance). Shopping later in the evening
, perhaps on Wednesdays, could net you reduced prices. Miller notes that Trader Joe's pulls expired food on Fridays so the weekend is a good time to visit the food pantry they donate to.
- Get bread and produce weekly at most food pantries. Find a list of food pantries at Feeding America.
Shop at salvage grocery stores
Step 3. Find New Sources of Income or Cash
Sell stuff: Selling stuff you don't need
Find temporary work: The most important thing to do, though, is to be relentless in looking for income. Tap your local unemployment agency for help and follow our unemployment survival guide
Even small things like babysitting, tutoring, or running errands can help you stay afloat. You might sign up to become a TaskRabbit, for example, to do simple tasks in your neighborhood.
Explore loan options: If you need more cash right away, you have several borrowing options
Seek government/non-profit assistance: Finally, don't forget that there are government programs that could help you get back to financial stability, beyond unemployment insurance and food stamps. Main Street lists a few of them, targeted towards low-income households, but you could also confidentially contact United Way for help finding assistance or programs that apply to you, including financial planning and help with the job search.
Bankruptcy is an option that can clear you of many debts-but won't completely solve your problems
When you're broke and have a family to take care of, sometimes you'll have to take desperate measures like dumpster diving, giving blood, and other emergency measures. It's heartbreaking, but millions of people are simply doing what they have to do to get by.
Hopefully you'll bounce back soon. Don't forget to keep active and take care of yourself during this challenging time.