Dealing with any financial problem can be quite stressful and can take a toll on your life. If you don’t have an emergency fund or savings account and live paycheck to paycheck, even a minor emergency can set you back.
Life is filled with surprises, from a broken appliance or car trouble to a serious medical emergency or job loss. Anything unexpected can cost you a lot of money, and once the bills pile up, it can be truly paralyzing.
While it’s always best to strive to be financially stable and be prepared for any emergency, having a shortage of funds is common. And when that happens, there are many options you can explore to get out of the financial hole you’re in.
Here are some strategies for when you’re strapped for cash:
Find things to sell
One of the best ways to make quick cash without incurring debt is to sell things you already own. It could range from pre-loved clothes, shoes, and electronics to a second car or even a real estate property. If you need a lot of money to pay medical bills or any other unplanned expense, go over your assets and possessions and see what you can let go of.
If you have a lot of stuff at home you rarely use, consider having a garage sale or sell these items online. If you have a talent for crafts or cooking, you can sell products online as well. If you have other skills you can capitalize on, consider doing freelance work or consultancy on the side.
Consider alternative financing options
Most people turn to their credit cards and banks to pay off a hefty unplanned bill, but this shouldn’t be the default option. Taking out big loans can set you back even more in the long run when interests and late payment charges start to pile up. You may consider alternative sources of funding like crowdsourcing. You can also turn to hard money lenders, which allow you to borrow money against collateral.
Talk to your bank about debt restructuring
While having monthly credit card or mortgage payments can be doable for most people, a financial emergency can cause you to miss monthly payments. Over time, this could get out of control and push you into a seemingly endless cycle of debt.
When the time comes that your debt is unmanageable, you may consider consulting with your bank about restructuring your debt. Some banks would convert big payments into monthly installments or work out a lower interest rate in exchange for a longer repayment term.
Get help from friends & family
Some people shy away from asking for help, and that’s OK. But asking for help isn’t a sign of weakness. When you’re in dire need, friends and family won’t hesitate to help you. And you’d be surprised to see how far they’re willing to go to get you out of that rut. All you’d need to do is ask.
Another advantage of borrowing money from family and friends is that your debt won’t be subjected to strict payment terms and interests. But, of course, you should still commit to paying it once you’re out of your financial hump.
Eliminate unnecessary expenses
Optimizing your expenses is another simple strategy to help you get out of financial trouble. This entails making sacrifices, such as adjusting your lifestyle according to your current financial standing. If you have a lot of credit card debt, for example, it wouldn’t be wise to go on shopping sprees monthly.
Make a thorough assessment of your lifestyle and find things you can downsize, like your streaming subscriptions, groceries, electricity consumption, and so on. Consider cooking instead of eating out or ordering in. Take public transportation if it’s easily accessible instead of driving every day. These small sacrifices can go a long way and significantly free up your budget.
Avoid incurring new debt
Debt, in small amounts, is completely normal. But you should only borrow what you can pay off with your income. That said, avoid exhausting your credit limit if you’re unable to pay all of them off the next billing period. And if you still have an outstanding balance on your credit cards, try your best to avoid incurring new debt before you pay it off. Credit cards should only be used for emergencies or if you have a sizable amount in your bank account and not as your default source of funds.
Get on a budget
Not having a budget makes you more likely to lose control over your finances. The best budget plans are those that account for every cent you earn, owe, and need to spend on or pay off. You can write down your monthly budget in a notebook, or you can use budgeting apps and make sure to keep track of everything to a tee. This may sound a bit obsessive, but it can help you regain control of your finances.
Meta title: Solutions for Overcoming a Shortage in Funds
meta desc: Any kind of financial trouble can be paralyzing, but there are many strategies you can employ to regain control of your finances. Read this article to explore different options for when money is tight.
