No matter how careful you are about your spending and regardless of how well you kept to your budget, something always comes up that will throw a wrench into your plans. Emergencies can come in many forms, but one thing is for sure, it's going to throw your budget into a tail spin.
Be it a broken appliance, a car problem, a health issue, or any of the other unpredictable, cash sucking issues that can pop up, it's going to cost you money and you probably don't have money to spend on it. So what do you do when emergencies happen?
Well, first of all, analyze whether or not it's a true emergency. Ask yourself a series of questions, and determine whether this emergency is a life or death situation. If you can still live, perhaps it's not an emergency after all. Perhaps there is a chance you can hold off on fixing or replacing your problem until you can afford it. (NOTE: If your emergency is health related ALWAYS assume it is life or death, and take care of it IMMEDIATELY. Delaying health issues can only result in MORE health issues down the road.)
Decide how essential the broken thing is to your daily routine. Is it something you can not function without? For instance if your shower is broken and you only have one or if your toilet is flooding or your roof is leaking, you probably need to take care of the issue pretty fast. Is it something that is costing you money by being broken? Like if your sink is leaking, you're paying for that wasted water, or if your fridge is broken, you're paying for the food that goes bad. These are things you want to take care of sooner rather than later, because they are just going to keep costing you while you put them off. Will it being broken effect your job? For instance, if your car no longer runs and you can't get to work, you can't get paid. Not a good situation for anyone.
If your issue doesn't fall under one of these categories, consider whether it's really an emergency. If your dishwasher is broken, could you just do the dishes by hand for a while? If the washer or dryer is broken, is there somewhere else you could do your laundry? If you can find another solution and it isn't too inconvenient, then perhaps your emergency is not really an emergency after all. This might not make your life a lot easier, but it will keep you from having to drop several hundred dollars you don't have.
However, if you can find no other solution, or your issue is truly life or death, then you have no other option than to spend the money you don't have. So how do you go about doing that? Well the object is not to put yourself into any more debt than you are already in.
If something is broken, consider trading for services to fix it. If you know a neighbor or friend who is in this area of expertise, perhaps offer him a trade. Make sure your trade is actually reasonable. For instance, if your neighbor is a mechanic and you've noticed he hates mowing his lawn and pulling weeds, offer him your landscaping skills if he would replace the brakes on your car. This wont work for everyone, but for some this might be the cheapest and best way to solve your problems. Just remember, if the person agrees, make sure you hold up your end of the bargain and don't slack off. Also, if someone is voluntarily doing manual labor for you around your house or car, make sure you offer them a drink or a snack. Be courteous, they're doing you a favor!
If trading services isn't something that is going to work for you, you're going to have to fix your emergency the old fashion way. So start by taking money from more flexible parts of your budget. You might have to completely eliminate your entertainment section of your budget and forgo any nights out for the next month or two, but you'll be glad you gave these up when you realize you saved yourself a lot of hassle. Try to scrape a few dollars out other areas, like your food budget or your transportation budget. I'm not saying starve yourself, but perhaps you can pass up your favorite cookies this month, or take your bike to work instead of buying gas for a week.
Next, cash in any 'emergency piggy banks', seeing as this qualifies as an emergency. For instance, if you've been saving coins in a coin jar for months, this might be the time to use them. I know you were saving them for a vacation, but your vacation is never going to happen if you just keep piling on more to your debt.
Next, consider finally selling those things you have laying around the house. Throw them up on eBay or craigslist and see if you can get a few dollars for them. Any little bit will help. Do anything you can to pay for as much of your emergency in cash as possible. If you can avoid charging your emergency, you've done a good job. The last resort is to put your emergency on a credit card. If you can at least pay for half your emergency in cash, you should.
If you have to charge it, you have to charge it. But get it paid off as soon as possible. Unfortunately, debt never disappears. The faster you pay it off, the less it can haunt you.
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Thursday, April 12, 2012
Monday, April 2, 2012
The Jar: A debt relief reward system
So when my boyfriend and I first bought our house, we had an old pickle jar out on the counter where we threw any coins that we had in our pockets at the end of the day. Our initial idea was to take the jar down to the bank each month and add what ever 'extra' money we collected to our monthly mortgage check. I had read somewhere that something as small as adding an extra quarter to your mortgage check each month could potential take years off your loan.
Our intentions were good, and we did collect about a half a jars worth of coins that first month, but we just never got around to going to the bank with them. So we said we would keep collecting and go to the bank the next month. Well that didn't happen either. Pretty soon we filled our little pickle jar. As the jar was filled with just pennies, it really didn't seem possible that we had accumulated that much money. So we decided to just continue collecting. I brought home one of those 5 gallon water jugs from our break room at work and we set a new goal. We decided when we fill this jug, we will take the money down to the bank and cash it in. However, we decided we're going to use whatever money is in there for ourselves instead. We arnt putting a label on it right now, but we're going to reward ourselves with it. Maybe we'll use it towards buying a new TV, or towards a little weekend trip away or something. What ever we use it for, it'll be almost like a free gift, because it's not like we're missing the money that's piling up inside our jug. We're not painstakingly pinching pennies, we're just tossing our change into the jar, rather than having it float around cars and jacket pockets and purses.
I can see the question forming in your mind though. Why not put the 'extra' money towards our debt? If you don't miss it, it's the best money in the world to put towards the mortgage our your college loan. But we decided this made more sense. Why? The answer is simple.
When you're constantly saving and trying to pay things off, you forgo a lot of things. I wore broken shoes for two months, simply because I couldn't justify spending the money on myself to get new ones. We pass up eating out, going to movies, buying our favorite snacks, because they're all things we don't 'need'. But it's hard to live like that. It's hard to constantly deny yourself things. It's especially hard to deny yourself things for long term causes, like paying off debt. This is harder because you don't see the benefits of your sacrifices right away. It can seem like you're doing all this going without for no reason, and sometimes this can cause people to give up on their goals. So this jar is now our reward system. We wont feel guilty about spending the extra money on ourselves, because we earned it. We were patient and (hopefully) put a good dent in our debt and we deserve a reward, however we wont be spending money that we'll miss. It'll be the extra money that in a way, we didn't even know we had.
If you're trying to free yourself of any kind of debt, be it credit cards, college loans, car loans or mortgages, I suggest setting up a jar system. If you arnt as patient as me and my boyfriend are, use a smaller jar and use the money to go out to see a movie, or something less expensive that you can earn your way towards more often. You'll be amazed at how something so small can make an impact on how you feel about your progress towards your debt relief.
Our intentions were good, and we did collect about a half a jars worth of coins that first month, but we just never got around to going to the bank with them. So we said we would keep collecting and go to the bank the next month. Well that didn't happen either. Pretty soon we filled our little pickle jar. As the jar was filled with just pennies, it really didn't seem possible that we had accumulated that much money. So we decided to just continue collecting. I brought home one of those 5 gallon water jugs from our break room at work and we set a new goal. We decided when we fill this jug, we will take the money down to the bank and cash it in. However, we decided we're going to use whatever money is in there for ourselves instead. We arnt putting a label on it right now, but we're going to reward ourselves with it. Maybe we'll use it towards buying a new TV, or towards a little weekend trip away or something. What ever we use it for, it'll be almost like a free gift, because it's not like we're missing the money that's piling up inside our jug. We're not painstakingly pinching pennies, we're just tossing our change into the jar, rather than having it float around cars and jacket pockets and purses.
I can see the question forming in your mind though. Why not put the 'extra' money towards our debt? If you don't miss it, it's the best money in the world to put towards the mortgage our your college loan. But we decided this made more sense. Why? The answer is simple.
When you're constantly saving and trying to pay things off, you forgo a lot of things. I wore broken shoes for two months, simply because I couldn't justify spending the money on myself to get new ones. We pass up eating out, going to movies, buying our favorite snacks, because they're all things we don't 'need'. But it's hard to live like that. It's hard to constantly deny yourself things. It's especially hard to deny yourself things for long term causes, like paying off debt. This is harder because you don't see the benefits of your sacrifices right away. It can seem like you're doing all this going without for no reason, and sometimes this can cause people to give up on their goals. So this jar is now our reward system. We wont feel guilty about spending the extra money on ourselves, because we earned it. We were patient and (hopefully) put a good dent in our debt and we deserve a reward, however we wont be spending money that we'll miss. It'll be the extra money that in a way, we didn't even know we had.
If you're trying to free yourself of any kind of debt, be it credit cards, college loans, car loans or mortgages, I suggest setting up a jar system. If you arnt as patient as me and my boyfriend are, use a smaller jar and use the money to go out to see a movie, or something less expensive that you can earn your way towards more often. You'll be amazed at how something so small can make an impact on how you feel about your progress towards your debt relief.
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