Steps to deal with a financial emergency

Dealing with a financial emergency can be tough, especially if you don’t have any savings to fall back on. And it can be caused by any number of things. Perhaps you or your partner has lost their job, or you’ve been struck by illness, the COVID-19 pandemic has affected your financial stability, you need an emergency home repair or your car has died. Or maybe the rising cost of living, higher interest rates, and inflation have caused your day-to-day expenses to increase dramatically, leaving you short of money.

First and foremost, don’t panic. You may be feeling stressed and confused, but there is always a way through financial struggles. They can affect anyone, and it shouldn’t be something you feel embarrassed about. By taking the right steps and getting the right support, there are ways to help yourself get back on your feet.

1. Evaluate the situation

As soon as you realise that you’re in a bit of a financial hole, take a moment, and carefully evaluate your situation. Running around panicking won’t solve anything; it only adds to the stress. You need to stay focused, avoid blaming yourself and remember that there is a way forward.

First, you’ll need try to determine the real root cause of this financial emergency. Your plan of attack will need to address the root of the problem, or else it’ll just be putting a sticking plaster on a wound that’s bound to open again.

So, assess your liabilities. Make a list of all your debt, including credit card debt, loans, mortgages and bills, and establish which bills are the most important. Remember, not all expenses are created equal. Some bills need to be paid before others, and if you can’t afford to pay them all, then you need to prioritise. You can begin looking for expenses to cut back or cut out altogether. Letting your internet or streaming service lapse is inconvenient, but it is not the end of the world. It’s easier to find places with free Wi-Fi than it is to find a new place to live. Then you can start budgeting and setting up an emergency fund.

2. Talk to someone you trust

It’s important to open up about your situation and seek support. Share your money worries with close friends or family who can offer advice and emotional help. Nobody likes to ask for money, but it may be that a little bit of help from a loved one might be all that you need to get through the rough patch.

You could also speak with a financial advisor who could review your situation and suggest ways to deal with your debt. Do you know others that have sought financial support before? Perhaps reach out to your local church, or other organisations that may be connected to things happening in the community. Citizens Advice is a good place to get information about benefits and how to deal with debt.

3. Get information about possible government assistance

Many people who are entitled to financial assistance don’t realise they are. So, find out as much information as you can. Sometimes people may feel shame about reaching out, however, we are all entitled to help when we need it. That is precisely what government financial assistance is there for. Work and Income states: “Even if you don’t think you qualify, call us to check your eligibility”. You can call them on 0800 559 009. You may be eligible for emergency food grants or ongoing housing supplements. Work and Income may also be able to help with urgent or unexpected costs, such as

power, gas and water bills, repairs or replacing appliances, emergency dental treatment or glasses or emergency medical care. In some cases, you will need to repay the money, but at least you won’t be whacking the cost on your high-interest credit card.

4. Negotiate with your lenders

If you’re struggling to make payments on credit cards, laybys, phone bills, power, gas or mortgages, get in touch with the companies you owe money to as soon as possible. A common mistake is to wait until you’re severely behind with payments before contacting them. However, by then, they won’t be as willing to work with you. If you know that money is getting tight and you might need help, then call them. Many lenders are willing to work with you if you communicate early.

Explain your situation and ask if they can offer any assistance, such as lowering interest rates or extending payment terms. Ask if you can pay your bill in instalments. The amount you repaymonthly will be far less daunting and may prevent you from putting the entire bill on your credit card, something that should be avoided at all costs.

5. Take stock of your assets

Look at what you own. Old stuff in your house may be worth a decent sum of money. If you have valuable items like jewellery or collectibles, consider getting them appraised so you know their worth. Then get started on Trade Me. If you haven’t used something in a year, do you really need it? Not only does selling what you don’t need bring in extra money, it can declutter your home and reused goods don’t end up in landfills.

6. Create a side hustle: income outside your full-time job

Rent a spare room. If you rent or own a home, and there’s a spare room, you can earn up to $40,000 tax-free. Yes, you will have people in your house, taking up space, sitting on your couch, using your kitchen and bathroom, but the extra money can be considerable, and it need not be forever. The IRD lets you deduct up to $194 per boarder per week. You’ll need to cover expenses such as power, phone, internet, food, streaming subscriptions from the revenue you receive.

Airbnb it

Airbnb is another way to generate passive income from your home or spare room. How much you make will depend on where you’re based, how frequently you rent out your place, your home itself and the services you provide. It’s also important to keep in mind that you will probably have to put in money or your time, or both, to prepare your space for renting.

Find a part-time job

There are plenty of part-time jobs available. The hours may be inflexible and none too social, but part-time positions tend to pay weekly, so you won’t have to wait long for money.

List services on Fiverr or Upwork

Freelancing is another option. Freelance work be done when you want, and you can choose the type of work you do while earning some extra dosh. Fiverr and Upwork are marketplaces for businesses looking for professional services, such as design, data entry, content writing,

PowerPoint preparations, web design, proofreading, app building, video marketing, translation work, admin and customer support as well as finance and accounting. What you earn depends on the value of the services you offer and the competition for the job.

On-demand services for neighbours

Dog walking, pet sitting, child sitting, house sitting, cleaning, gardening, and lawn mowing: they’re all big business. People love their dogs, and if you’re available from 9am to 5pm, setting up a dog walking service can be a good money earner. If furry animals aren’t your thing, human minding is another option. Local, well-known babysitters and child-minders are in-demand people, and the old-fashioned approach of word-of-mouth often works best. If small people don’t do it for you, many households are happy to pay for cleaning and gardening services. An afternoon’s work could earn as much as $150.00.

If you’re going to offer these types of services, establish yourself by putting together a flyer and distributing it around the neighbourhood. You could also set up a Facebook Business page and promote your services on local-area and special interest Facebook groups.

7. Find extra sources of money

Consider options like personal loans or emergency loans but be cautious with borrowing more money. Borrowing can help in the short term, but it can also lead to more financial stress. It can come with high-interest rates and a new monthly payment which will only draw out your financial hardship. Then, you may find yourself in a downward spiral from which it is nearly impossible to claw back from. At Hippo Cash, we know what it is like to be caught short and then hit with unexpected expenses, and we can assist with fast emergency loans. The process is as fast and simple.

8. Plan for the future.

Once you’re out of your current financial crisis, take steps to prepare for future emergencies. Start building an emergency fund, even if it’s small. You also need to review your income and expenses closely. Take a look at how much money you have coming in and where it’s going. Identify areas where you can cut back. Small savings can add up over time and help you tackle any future financial crises more easily.

Remember, you’re not alone in facing a financial emergency

Reach out for support, evaluate your situation, prioritise expenses, and take proactive steps to improve your financial health. You will get through it.