Lessons from the government shutdown: Be prepared!
When times are good, nobody likes to think about financial distress. But, as we learned from the government shutdown of 2013, financial hardship can strike at any time. Best to be prepared to protect your home and your financial future.
1. Call your bank. If you have a mortgage, you should call you lender right away when financial hardship strikes. Many banks are prepared to help you through difficult times. You may be able to defer payment on your mortgage or other debts, such as auto loans or credit cards. The key, however, is to call right away and explain your situation so your lender can determine if there’s a program to help you.
2. Make a budget. Calculate how much cash you have or you can gain access to quickly. Do you have a home equity line of credit you can draw on if needed? Tally your monthly bills — utilities, loan payments, food, etc. — and prioritize expenditures. Determine if there are items that may be luxuries you can do without temporarily during hard times. Your mobile phone service, for example, may allow you to suspend a phone line. The time the line is suspended may be tacked onto the end of your contract period, but this does save you money in the short-term. If you need some practice budgeting, here’s a good place to start: The National Federation for Credit Counseling has an online budgeting tool.
3. Protect your credit score. In the midst of trying to makes ends meet, don’t lose sight of your credit score — which is important if you apply for a mortgage or other credit in the future. Try to make at least the minimum payments on your debts, and make them on time. Remember, your credit score can get dinged if you close existing lines of credit or credit cards, or if you apply for new lines of credit or credit cards.
4. Consider community assistance. Many communities have services and organizations that provide assistance to individuals and families facing a sudden financial hardship. Many food banks, for example, offer emergency food boxes for people facing unexpected financial need.
5. Seek credit counseling. If your financial problems are mounting, talk to a credit counselor. The Department of Housing and Urban Development maintains a list of approved credit counselors who can help. These approved agencies can provide guidance and counsel you on wise choices for on-going debt management.
6. Beware of scams. You should always watch out for businesses offering job opportunities and financial solutions that seem too good to be true, and especially when you’re in dire straits. Con artists have a knack for targeting those in need.