Budgeting Tip

What You Can Do In A Money Emergency

Occasionally a great budgeting tip can evolve from practical experience. I received an email from a site visitor who shall remain anonymous. After replying to their email, I realized they weren't the only one who might need the suggestions I offered to help them out in a serious money emergency.

This article outlines the steps you can take if you hit a Money Emergency. Here is an excerpt of the email I received, published with permission of the writer:

"...she has alot of the same financial problems I do. Seems she really messed up her checkbook, and when she deposited her husbands check of $500 and something, all that is left is $6.00, which includes about $150.00 in nsf fees. I felt so bad for her. I told her to go to the bank and talk to them, I mean she has never asked for them to waive any fees before. I am hoping they will work with her, where she can at least buy groceries or at least get through the week, we had a long talk I told her about your website..."

This email broke my heart, mainly because I've been there too. But it also brought a bit of pleasure to me knowing the writer turned to our site for the answers they needed for themselves, and their friend.

An excellent point was made in the email about talking to your bank to see if they can help by reducing the NSF fees. Some banks will work with you on this, some won't. But it never hurts to ask.

Of course, the first thing most of you may think of is asking family for a loan to help through this rough patch. Personally, I don't recommend it. Borrowing money won't solve money problems, it only makes them worse. Why? Because it didn't teach you anything. If you can always turn to someone to bail you out, you have no incentive to find out why you have the money problems, and how to fix them once and for all.

Here are some quick cash fixes you can use (without additional borrowing) to recover from a Money Emergency:

Budgeting Tip: The first thing you have to do is prioritize to get back on track. If that means letting a credit card bill go for a bit, so be it. Contact your credit card issuers and request reduced interest rates and payments. Not one, both!

Budgeting Tip: If you have a car payment, call the creditor and request a payment extension. Normally I hate payment extensions, because they require a fee and you still have to make the payment at the end of the contract. But, in this case, a payment extension can allow a little breathing room to help you recover. You would likely have to pay a fee (usually about 1/4 - 1/3 the car payment amount) for the extension.

Budgeting Tip: You can also check to see if your mortgage holder will allow an extension for a nominal fee.

Budgeting Tip: Another quick fix, is a fast yard sale. Clothes that no longer fit, but in good condition, knick knacks, dishes, books, stuff you bought but no longer use, can all be sold (for a lot less than you paid granted) quickly. Put some notices up at laundrimats and grocery stores around town, and a sign at the end of your driveway. I did this one weekend and made $200 in fast cash and I live in a very rural area.

Budgeting Tip: If you have a larger item to sell, check the local radio stations to see if they have a call in swap show on the weekends. This is a popular way to quickly convert unused and more expensive items to fast cash.

Budgeting Tip: Another option is with utility and telephone bills. If you aren't already on a budget plan, you can ask that the current bill (plus any previous balance you owe) be set up for a budget plan. This requires a down payment (usually 1/4 of the bill) and that all future bills (while on the back payment budget plan) be kept current. But the nice thing about it ... it's usually interest free, and can give some breathing space for a month. You have to be careful though that you maintain the regular utility payments AND the budget payments in the coming month.

Budgeting Tip: Check with your Church regarding hardship help. Local churches are one of the best places to find out what's available in the community to help those in need, or in times of emergency.

Getting Fast Cash With Borrowing

If you absolutely, positively, no-way-out have to have some fast cash, and you have exhausted all of the above, then borrow. First ask family, then your local bank.

As a last resort you can consider what's known as a " payday loans ." I don't recommend these types of loans for anything but extreme emergencies where cash isn't available anywhere else.

These companies basically have you send in a post-dated check, or a voided check, then they credit the loan into your bank account. However, the next payday you have, they deduct the full loan amount, plus you have already paid a fee (deducted from the money you borrowed initially) which is usually around 8%. They also have a limit on borrowing of up to $500, which means a fee of about $35 or $40. That's steep interest to pay for a one or two week loan.

But, if you have to have it, you have to have it. Here are some of the online companies that offer fast personal payday loans :

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