Dial #1: Increase Income - Increasing income through overtime or a second job can be a way to get you over a hump. It doesn't have to be a long term gig, but an extra boost to help you though a tight spot can be a real help. You might even consider turning a hobby into an extra income source so that you can make some money doing the things you love to do. For some, extra income is a necessity for maintaining self sufficiency. In those cases it is important to consider your career path and whether you can grow your income longer term.
Dial #2: Mitigate Expenses - This means finding a way to fund your needs with minimal cash outlay. For instance, can you swap babysitting services with a friend or neighbor to cut the cost of date night? Perhaps you can find a way to get along with something less expensive until you are able to save a little more. If you were planning on a movie, can you find less expensive alternatives to the theater? Lessening these expenses allows you more money to fund the other categories of your spending plan.
Dial #3: Cut Other Expenses - You may find that cutting back on other categories of your spending plan may be necessary to make ends meet or to fund your emergency savings. Use the Financial Decision Tree to determine what categories are most controllable. For instance, in my housing category of my spending plan are there some things that I can control in the short term? Perhaps I can minimize utility usage or cut the cost of telephones. Discretionary expenses like eating out, entertainment, savings, or clothing might be more easily controlled in the short term, but if you have to eliminate an expense to get you over a hump, remember to make a plan to add some living back into your budget as soon as you overcome the crisis.
Dial #4: Tap Savings - Savings is there for when something unexpected throws you off track so don't feel bad if you have to use some of your emergency fund, but always make a plan to restore that fund as soon as you can, because you don't know how much time you have until the next emergency. Savings is part of your longer term financial security blanket, so always consider shorter term adjustments before moving to reduction of savings.
Dial #5: Sell Assets - Do you have something hanging around not being used or some heirloom you can part with can help generate a little extra cash to tide you over? Selling assets may be a means to helping you through a tight spot. This time of year is great for yard sales and clearing out the precious treasures you no longer use.
Dial #6: Debt - While not a long term solution, sometimes using a credit card for an emergency and then making a plan to pay it off can help you address your current needs. It is important that in using debt that you don't create a long term problem for yourself that you can't easily address. Too often people find themselves in financial stress because of their debt, so use debt sparingly and repay as quickly as possible. Another solution related to debt might be to use an asset that has equity such as a home or a car to restructure the regular debt payments for the household so that monthly expenses are more manageable. This will likely lengthen the term of your debt, but stretch out the payments enought that you can breathe a little easier.
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