Debt is tricky business. It can either help you or hurt you, and the tipping point often comes when financial hardship strikes. Good debt doesn’t have to become bad debt, if you know how to survive a financial hardship.
The best way to stave off the effects of financial hardship is planning. This means having a plan for your expenses and debt accounts before the hardship even strikes. Having an emergency fund that can cover your essential living expenses and debt payments for a few months is a great safety net. Unfortunately, most people never bother to save for this type of fund, leaving them in a financial crisis from the start of the hardship. A good rule of thumb is to have at least three or more months worth of your expenses saved in an account separate from your regular savings that can be used to cover the majority of your expenses.
If you have yet to create an emergency fund and find yourself already in financial hardship, there is still some ways to minimize the damage of lost income. First, examine your expenses and mark only those that are essential, such as food, housing, transportation. Eliminate all unnecessary spending and determine whether your needs for seeking additional income. You may need to obtain a second job, borrow from family or consider whether you need additional help. If you are at risk of foreclosure, wage garnishment or asset repossession over your debt obligations, consult a Fort Worth bankruptcy attorney about your options. Even if you don’t need bankruptcy, many attorneys are also trained in the art of debt negotiation and foreclosure defense. Their skills can help you stave off further consequences while you get back on your feet.