Whether your goal is to save money, eliminate debt, or a combination of both, a solid financial plan is important for your future. But what do you do when your plans go awry? A job loss, divorce, unexpected expense, or any number of situations can throw a wrench in even the best-laid plans. This is not only disheartening, but it can also make it difficult to save money, pay down debt, or even cover the bills each month.
Luckily, an unexpected situation doesn’t have to mean disaster for your finances. There are plenty of options that can keep you on the right track even when the unexpected occurs:
Start living on a budget.
If you are suddenly faced with a loss in income or other catastrophe, it’s more important than ever to put each and every dollar you have to good use. A budget can help you track your expenses and ensure you’re not spending money on non-essentials.
Look for alternative sources of income.
When money is hard to come by, every little bit helps. Look for ways you can make a little extra money to help cover expenses or save money. For example, working part-time, doing odd jobs, or selling items around the house can help you stay afloat during financial difficulty.
File for EI if you’ve lost your job.
If you’re eligible for Employment Insurance, make sure you file for it as soon as possible. Waiting too long can disqualify you from receiving benefits. Even if you have a savings account to fall back on, the incoming cash you receive from your benefits can help hold you over until you find your next job.
Contact your creditors.
If you’re on a repayment plan for any of your debts, contact your creditors and find out what options are available to you. You may be eligible for hardship deferments or income-based repayments. This will keep you in good standing with your creditors even when you find it difficult to pay down your debts.
Focus on minimum payments.
Anyone trying to pay down debt knows that minimum payments will keep you in debt as long as possible. However, when your income has been reduced or a sudden expense comes up, the money you used to pay down debt will need to be used elsewhere. Until you are back on solid financial ground, focus on making the minimum payments required. This will help keep your credit intact.
Avoid incurring more debt.
If you’ve focused solely on paying down debt, you may not have an emergency fund to fall back on. When this is the case, avoid incurring more debt through credit cards or personal loans whenever possible during an emergency. Excessive credit card use or reliance on debt can create even more problems down the road.
Life rarely goes as expected, but that doesn’t mean your financial plans have to suffer. A plan of action for unexpected situations can help stay on the path to reaching your goals.