Two heads are better than one, so sit down
with your spouse and plan out your financial future together.
Prioritize your bills.
By determining which bills to pay in which
order, you'll get in the habit of making sure your essentials
are always paid first.
Be careful using credit. Sometimes a financial crisis will
come not because of a layoff, but because you're overextended.
Most people can afford to devote 10 percent of their net
income (after taxes) to installment debt, not including
mortgage or rent payments. If you pay out more than 15 percent,
you need to cut back.
Establish an emergency fund. Open a savings account and
start "paying yourself" 10 percent of each paycheck.
What happens if we run into an emergency and our emergency
fund isn’t enough?
Don't panic. When facing a financial crisis, stay calm.
This will help you think logically and you'll avoid unnecessary
arguments with your spouse.
Quit spending money. When faced with a financial challenge,
it's easy to use your credit cards. But you may run up your
balance to the credit limit and not be able to afford the
payments, which will result in a poor credit rating—something
you won't want during a crisis time.
Prioritize your bills. Pay essential, or survival, bills
first: food, mortgage or rent, utilities. Next, pay car
insurance, medical needs, child support, and any loans such
as automobiles and furniture that are secured as collateral.
Then pay the nonessential bills—those
debts in which no immediate consequences occur if paid late:
credit and charge cards, attorney, medical, and accounting
bills, newspaper and magazine subscriptions, life insurance,
childcare, gyms, or clothing.
Communicate with your creditors. If you can't pay your bills
or can only pay a partial amount, your creditors may be
able to help you to establish a repayment plan.
Some lenders will allow you to defer one
payment a year, meaning the payment for that particular
month doesn't have to be made. The deferred payment is added
to the end of the contract.
Take notes of any conversations with creditors, listing
the date and person with whom you spoke. Whatever arrangement
you make, get it in writing from the creditor before you
send in money.
Know your rights. Many collection agencies are in violation
of the Fair Debt Collection Practices Act. To get a copy
of this legislation, visit www.ftc.gov. If you feel you've
been violated, file a complaint with the Federal Trade Commission
at their website.
Find outside help. Many churches and Para church organizations
run programs to help you navigate through financial troubles.
A debt management company may also be able
to help you reduce your payments, lower your interest rates,
and pay off your debt faster than trying to do it yourself.
Such companies can also negotiate with your
creditors to bring your accounts current if they're past
due.
Avoid bankruptcy. Bankruptcies should be your last resort.
A bankruptcy can remain on your credit report for up to
10 years.
