Better Budgeting: Preparing for the Worst

Preparing for the Worst

Budget Stretcher (featured column)
by Terry Rigg

I would say that most of us have experienced money problems at some point in our lives. This could have been caused by the loss of a job, injury or illness, over spending, and the list goes on and on.

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Right now in the US there are hundreds of companies down sizing or going out of business. In some cases this is due to the economy. In others we have seen cases of very poor management and down right fraud. No matter what the reason, people have lost their jobs and their income.

In a lot of cases this can't be prevented. If we can't prevent the hard times, then just what can we do? Prepare! Prepare! Prepare!

I know you have all probably heard that you should have at least six months income set aside in case you lose your income. Yeah, right! With things as expensive as they are today, you are lucky if you have six days income set aside.

If you don't have money saved for when these problems occur, then just what can you do? First and foremost, you need to have a plan in the event this does happen. Just sitting down with your budget and saying to yourself "What If" will help you know what you need to do to be prepared.

Here are a few suggestions that will make it a little easier:

It is always best for you can keep your bills to a minimum at all times and try to save as much as you can. Even if you are bringing in good money you need to consider the loss of your income before you make any major purchases.

Keep your freezer and food pantry stocked.

Determine what assets you could use in the event you needed money to get by. Start with things like an IRA, 401k or other savings. You can also consider things that you can sell to bring in money or reduce your debt.

If things get real bad, you will need to know where you can get help. This could be from family and friends or government aid. There are a lot of people that have had to resort to this form of help that never believed it could happen to them.

Know your priorities. Food and shelter will be your main concerns if you lose your income. Whatever money you have should go for these expenses first.

Contact all of your bill collectors as soon as the problem arises. Let them know that you have lost your income and are doing everything you can to get back on track. Get the person's name and department you spoke with and tell them you will keep them posted. Trying to hide from these people will only make matters worse.

Let the entire family in on the problem and tell them that there will need to be some adjustments made. Enlist their help with ideas to earn income or cut expenses.

Being prepared for the worst will make you sleep a little better while times are good.

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Copyright © 2002 by Terry Rigg. All rights reserved.

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