2. Develop an “emergency” budget.
The NCLC also suggests drafting a “leaner” version of your regular budget, which is prudent regardless of whether you are currently experiencing financial difficulties. But it becomes much more critical if your hours are reduced, or shifts are canceled in the following weeks. “Make a list of all your present obligations,” the NCLC suggests.
“Circle the things you want to save money on so you can see how much you could realistically save if you halt subscriptions, limit travel, and cook cheap meals at home.”
3. Think about getting a personal loan.
According to Lending Tree, personal loans typically range from $10,000 to more than $20,000, with terms ranging from three to five years. They can be helpful to in times of financial instability.
They are available via banks, credit unions, and internet lenders such as SoFi and Payoff. The lower the interest rate you will be offered on a loan, the better your credit score. According to LendingTree, the average APR offered to applicants with credit scores above 760 is just under 10%.
This is much lower than the average credit card APR of 17.08 percent, making a personal loan a better option for emergencies than a credit card. It would help if you looked into what different lenders offer to compare interest rates and other loan parameters. If you currently have a relationship with a bank, it may be able to offer you more favorable conditions.
If you own your home, you may also be able to obtain a home equity line of credit and borrow against the value of your home. However, this technique has some drawbacks, such as upfront expenses and potentially high-interest rates if you don’t have a decent credit score.
4. Select the lowest-interest-rate product.
You may be forced to use a credit card if you cannot obtain a personal or home equity loan. Use the card with the lowest interest rate to save on interest when paying off your account. Even a few percentage points can save you significant money in interest payments. One option is to look for low-interest offerings, such as a credit card or a line of credit with a 0% APY for a set period (typically 12 or 18 months).
This will offer you some wiggle room if you have problems meeting your financial obligations in the coming weeks. Again, folks with higher credit scores are more likely to qualify for better discounts, so if you have a low score, use the cards you already have before asking for a new one and perhaps getting denied.
5. Send letters of temporary difficult
According to the National Consumer Law Center, if you are experiencing difficulty paying your mortgage, your first step should be to seek a legal representative’s assistance. You can then send hardship letters to lenders, such as your mortgage company, to determine your choices.
