7 Tips to Handle Financial Emergencies and Obstacles
2020 has been quite a ride for many. We were evacuated in January due to the bushfires in the Shoalhaven area. Late January both an aunt and uncle died within 24 hours of each other overseas requiring an emergency trip back and total change of plans.
February we were in Sydney with flooding issues as we tried to leave for Vanuatu. Sickness spread across the world. March we flew to the Solomon Islands for a family matter. While we were on an outer island, Australia closed its borders and all flights were cancelled. My flight money was held instead of refunded and we had to find somewhere to live in Honiara, requiring a bond and advanced rent I wasn’t expecting.
The Australian High Commission in the Solomon Islands arranged a flight home. We had to be on it as I didn’t have a long-term visa, at a cost of 4 times what I had paid for our original tickets home. Leaving so quickly and unexpectedly, I had to forfeit the bond I had paid on our rental. Back home we were put into quarantine (where I am writing this article) and we now need to find somewhere to live here. I shared a little here (please be aware, friend requests from people I don’t personally know won’t be accepted. This is my personal account so you can follow or comment and I’ll respond).
Prior to this, homelessness, domestic violence and massive legal bills while fighting for custody (which I won) were all experienced. Huge medical bills due to paralysis (twice), cancer issues, surgery and other health issues. Plus my youngest has autism and both my daughter’s needed extensive speech and other therapy.
I’ve faced my share of financial obstacles and come out the other side. Here are my top tips to help you overcome financial obstacles and handle financial emergencies.
This post may contain affiliate links for products and services I personally use. You can read the full disclosure.
1. Have an Emergency Fund
Hindsight is great, isn’t it? Start building an emergency fund now, whether you think you’ll need it or not.
Personally, from well before The Barefoot Investor was recommending it, $2,000 was the minimum I wanted in my emergency fund. Realistically, most emergencies I’ve had were $2,000 or more.
Recently, if I hadn’t had over $10,000 to draw on, I would still be in Honiara, Solomon Islands. In order to get your emergency fund together and have extra cash, I recommend The Ultimate Guide to Make and Save Money at Home.
Have a Separate Bank Account
Kick Start Your Emergency Fund With $25.
Get $10 from 86 400! I’ve used 86 400 for a year now and they’ve been great. It’s fee-free banking and online only. Use the code S7VL6WF when you join free here to get your $10 after you use your card for the first time.
Get $5 from Up bank which I have been using for a while now. Get your $5 for joining in minutes.
What if you Don’t Have an Emergency Fund?
This position is one I’ve experienced plenty. You need to do 2 things – make more money and save more.
How to Make More Money
Selling off everything I could helped but there is a limit to it unless you are buying things to resell like I was. Check out my tips for buying things to resell. Also read about when I first started and my second month for more ideas.
Plus the eBook 99 Side Hustles for Aussies which has not only the ideas but how to do them, how to market them, tips for tax and more.
How to Save More Money
Go over every area of your budget and see where you can make some changes. Annually my finances are reviewed, sometimes saving me over $4,000. Read about how I do my annual financial review. Also read how to make and save money on everything.
What if you can’t Make or Save More for Your Emergency?
I went into debt to secure custody of my daughters. It’s not ideal but had to be done. Fortunately, my parents lent me the cash but at other times I have had to use a personal loan. My preference is to avoid going into extra debt.
Most of the time when we are in dire straits, we probably aren’t in the position to borrow money. Which means you’ll end up borrowing from payday lenders or those short term loans which cost a fortune in interest. If you choose to borrow, read the fine print, know the conditions and the interest charges.
2. Get Real About Your Emergency
Is it really an emergency or is it just a tight spot? Bushfires, cyclones, health issues, leaving an abusive relationship, these are emergencies. Overspending then not having enough for a specific bill is not an emergency and there are probably things you can do to get around it.
Sit down, work out your budget, look at your expenses and what your emergency is. Are there other ways it can be managed? Is government help available? Check charities if you are in a position where that would be relevant or if you are a member of a church, ask your pastor/bishop/minister for help.
If it is something such as not enough money to pay the bill, ask for an extension from the company and set up a payment plan. Then stick to it! Charities can assist paying bills, as can most churches for their members.
3. Get Emotional/Mental Support
Either counselling or psychology if necessary. Financial emergencies and obstacles can put a huge strain on your mental health which causes more issues. If you need counselling or psychology to get through, do it. There are helplines set up for different circumstances so at a minimum, use that.
If the people in your life (family and friends) can be trusted and are supportive, let them know what is going on. Too often in my life, I kept my problems to myself. When I finally cracked and let people know I needed help, they were more than happy to do it.
For example, in 2015, I was paralysed on and off with level 10 pain. Level 10 is pain so intense you blackout. Childbirth is a level 8. I tried to take care of everything without ‘bothering’ others. One day, it got to the point where I couldn’t cope anymore. I sent an email to my family outlining the help I needed and that I had no idea when or if i would ever get better.
They stepped up immediately. Meals delivered, taking my kids to school, cleaning my house, everything. If you need support or help, ask for it. Don’t be too proud because it will cost you more in the long run.
4. Have an Attitude of Gratitude
You don’t need to be totally happy all the time but learning to have an attitude of gratitude can change a situation. By changing how you view a situation, your brain can look for solutions.
In 2012, I had just left my abusive husband, taking my 2 young daughters to a new rental. We’d applied for an AVO (protection order) and I was already dealing with the financial hurdle of this split, when within a week I was robbed of everything including my underwear.
It was only my personal belongings that were stolen, nothing else in the house was touched. Feeling violated, bawling my eyes out I called the police to report it then called my Dad. Once I’d calmed down, I wrote a gratitude list.
What’s a Gratitude List?
A list of reasons to be grateful for something. On this night, I managed to come up with around 14 reasons to be grateful I was robbed. The reasons ranged from being grateful I had insurance and could now buy new clothes instead of having to use what I had from my marriage through to being grateful my daughters and I were not home when we were robbed.
Whenever something bad happens, I try to write a gratitude list, even if it is simply listing 3 things to be grateful for in my head.
3 Questions to ask Yourself to Cultivate and Attitude of Gratitude
Having an attitude of gratitude is easier said than done for some. When I was younger, I had depression and found gratitude difficult. Once I started asking myself the following questions, it got much easier and things that appeared to be obstacles, were easier to overcome. Many were blessings in disguise.
- What lesson can I learn from this?
- How can I be grateful this happened?
- What opportunity can come from this?
With the robbery, I was able to use the money to pay for my daughters extensive speech therapy and psychology. I was able to buy new to me clothing and no longer have anything that was attached to my ex-husband. We had money to start our new life. So many blessings came from it but it took a little while to see that. The gratitude list helped.
5. Know What You Want
Have a clear direction on what you need as an end result. In some of my life examples, when I left the abusive marriage, my end result was full custody of my daughters and safety for us. It 7.5 years but I got it.
With the paralysis and level 10 pain desired outcome was to be healthy again. Despite doctors telling me it was permanent, I refused to accept that and did what I could to heal myself.
When it came to the more recent emergencies, such as the closing of the Australian border, each step I decided what I wanted and it fell into place. When I wasn’t clear on what I wanted, I faced more obstacles. Be really clear on the result you want.
Whatever the financial emergency is, you might have room to negotiate and get it reduced or get an extension. Ask for discounts, extensions and if there is any assistance available for everything you have to deal with.
7. Learn To Let Go
Somethings are outside our control. Whenever we are faced with emergencies or obstacles, we need to assess and do what we can while letting go of whatever we can’t control.
This can be difficult when you are in survival mode, trying to make ends meet and make it all work. I’ve found when I focus on what I can do, the end result I want and let the rest go, it all falls into place.
How Can You Let Go?
It is not something I do perfectly all the time but there are a few resources which helped. Learning to meditate and ensuring I did it daily was my first step.
Books including Unleash Your Inner Money Babe: Uplevel Your Money Mindset and Manifest $1,000 In 21 Days by Kathrin Zenkina. Lucky Bitch by Denise Duffield-Thomas. You Are A Badass At Making Money by Jen Sincero. E Squared by Pam Grout. And The Big Leap by Gay Hendricks.
Counselling or psychology helped me talk through my issues and see things from a different perspective.
What Else Can You Do?
Financial emergencies don’t need to cripple you completely. Bouncing back from these obstacles might not be easy but it is possible. If you feel it is too much, please reach out, call a helpline and don’t try to do it all on your own.
Preparations For An Emergency
Once it is over or close to over and money stress has eased a little, look at what you can do to prepare better for emergencies. Firstly, a strong emergency fund helps. This money should not be invested in shares or stored in a way where it would be difficult to get if needed.
Next, look at having some food storage and storing other items you need or use on a regular basis. First aid, toiletries, basic foods, cleaning products if you use them and some supplies can go a long way to save money when facing an emergency.
Evaluate your life, home, car, everything and work out what potential emergencies you may face so you can plan accordingly. For example, in Vanuatu, cyclones are common so there are emergency plans in place. The home we stay in is well protected and when a cyclone warning is announced there are certain preparations we all take.
In Australia, bushfires, flooding, cyclones up north and massive storms are not uncommon. Each scenario requires a specific emergency plan. Be prepared for wherever you live and any situation you may face.
Mostly, save as much as you can. Pay down debt and plan for the future so when the next emergency hits you, you are better prepared and can bounce back easier.
What tips would you add? How have you dealt with an emergency?
Image by Justin Saula of Blackbeard Photography. Taken on Forest Road, Callala Bay, January, 2020, after the bushfires over Christmas and New Year’s.