How to Cope with a Emergency Cash Crunch

Wherever there are money woes, you can be sure to find crippling emotional setbacks too. You just avoid them. You will need to cope well with both if you hope to make a solid financial comeback.

Whenever a emergency cash crunch hits, it will be your ability to deal with the individual pitfalls that will hold you up. A series of financial hits can build up stress and make life difficult to cope.

You won't be overwhelmed if you calmly and rationally look at each individual problem as it arises. If you sit back wringing your hands with worry and allow all of your emergencies to pile into one then it is almost impossible to deal with them rationally and logically.

The more you panic, the less effective you will be. Keep calm and come up with an appropriate plan. Be aware of your own tendency to sabotage your plans further.

If your emergency cash crunch demands that you act quickly, think first about seeking the advice of a debt counselor, money coach or financial planner. Whenever possible think about seeking out the aid of a financially perceptive friend or family member who can help you to come to a clearer perspective.

You won't need to make a major cash investment if you're strapped. Look for a planner who will give you a one-hour consultation for $150. Often times this will be all you will need to securely turn the corner.

Time to Crunch some Numbers

The first step toward establishing financial stability is to step back, take a deep breath and assess the damage. Possibly one of the bigger mistakes people make when they're in a financial crisis is not being prepared to make a clear assessment of where they're at.

You can easily become overwhelmed. However, totaling up the damage serves two important purposes. First, you need to know exactly how much you owe, how much money you have in hand and what it will take to cover the distance between the two. Second, you will want to avoid any other mishaps, such as penalties, further repairs, missed deadlines, etc.

If you are not properly prepared, you must become prepared on the spot. Any type of emergency cash crush or money crisis will catch you unaware and you will feel cornered. Wouldn't it be ideal to be ready and waiting for the crisis? How likely is this to happen to you, though? 

Most people do plan for emergencies. If the crisis is not too dire, they will be able to handle it ok. The idea is to not be overwhelmed and to have a good plan of action, no matter how little or how a lot.

Ideally, those unexpected expenses could be covered by the funds in the Irregular Expenses account in any good budget. Unfortunately, though, there is always a common problem. You might well have an emergency stash-but it's most often depleted. This same problem affects the majority of us so take heart.

At about this time many people make the mistake of turning to plastic for relief. Resist this one. You will only be transferring your problems from one pocket to the other.

On the other hand, if you are sure you can handle using credit cards to deal with a emergency cash crunch, you had better be sure you could pay them off when the time comes. Otherwise, why add yet another debt and another problem. Eventually, it will all catch up with you.

If you're truly running while on your last leg, consider taking out a home equity line of credit. This will work for some. The interest is tax deductible, but those aren't fixed rates. Be smart about this remedy, though. Unless you plan to pay back the amount you borrowed promptly, it can end up costing you more than you thought-especially if you've already depleted your own equity. Remember you can always come out of an emergency cash crunch if you keep cool and plan properly.