There is a misconception that only those who live above their means have severe financial problems. However, one in three families reported struggling to make ends meet in a study by Harvard University, George Washington University and Oxford University.
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And that was before the outbreak of the COVID-19 pandemic. Additionally, 40% of Americans said they couldn’t cover an unexpected $400 bill without selling something or taking on debt, according to a 2018 Federal Reserve report.
What is most worrying about the above figure? This number was taken while the country was experiencing the longest economic expansion in history and a low unemployment rate. It just goes to show that most people are teetering on the brink of financial disaster due to lost income, medical bills, or home repairs; This also does not take into account the mountain of debt that most people are buried under as well.
Then there was the Covid-19 recession.
According to a survey by NPR, the Robert Wood Johnson Foundation, and Harvard T.H. Chan School of Public Health published in October 2021, nearly 40% of American households have experienced severe financial problems. Includes the number who struggle to pay for medical care and food.
However, when earning less than $50,000, serious financial problems were reported by 59% of Americans. Additionally, 30% of these low-income households report that they have completely lost their savings due to the coronavirus pandemic.
When you’re facing financial hardship, if you don’t have enough income to cover all your expenses, it can be a stressful time – to say the least. But, unfortunately, a lot of the pleasures and comforts you enjoy also have to be put in the background as well. After all, you should address priorities like food and shelter before anything else.
If there is any semblance of good news it is that there are ways to lighten the financial burden on you. For some, it can be as simple as organizing and controlling your finances, like creating and following a budget. For others, they may need more help. Either way, here you can find help if you’re having a financial problem.
do it yourself
When there is a financial crisis, you should always stop the bleeding of money. For example, buying a cup of coffee every day on your way to work or not packing your lunch. Unfortunately, when these small daily expenses are left unchecked, they can become costly habits.
Of course, there are also much bigger issues than enjoying a daily latte. This is because you may not have the basic skills of money management. Basic money skills include not knowing where your money is going, curbing unnecessary expenses, and how to pay off debt.
Fortunately, there are an abundance of tools and resources that can help advance your financial literacy. Best of all? Most of these are free.
- Financial blogs, such as Entitlement, share expert advice on everything from managing debt to planning your retirement.
- In addition to blogs, financial forums such as the Saving Advice Forum can connect you with others in the same situation.
- You can also head to your local library and browse or buy used books, like You Really Are Money: Live Rich, Even When You’re Not by Farnoosh Torabi or Index Card: Why Personal Finance Shouldn’t Be Complicated by Helen Olin and Harold Pollack.
- There are also helpful personal finance podcasts like Bad With Money With Gaby Dunn and DIY Money.
- If you’re more of a visual learner, head over to YouTube and subscribe to channels like Debt Free Millennials.
- You can also enroll in a financial course, as long as you have the time. Believe it or not, Khan Academy’s personal finance classes are 100% free.
- Finally, there is no shortage of free online budgeting tools to try. These tools can track your spending, automate savings, and help you achieve your financial goals. Some devices can even make smart suggestions, find better interest rates, or eliminate unwanted expenses.
Friends and family
Michele Singletari, author of “There’s No Time to Apply for a Loan” What to do with your money when a crisis hits a survival guide, he told NPR. “If you are going through a financial crisis, turn to the people who love and care about you and say: I lost my job. I don’t know when I can give you back. I don’t want to make a promise that I will break and harm our relationship.”
Singletary adds, “People will be surprised at how many people in their lives will be so willing to help.”
At the same time, borrowing from close friends and relatives can be risky. It states, “Failure to follow through on your loan can hurt feelings and destroy the relationship.” Marianne Hayes for Experian. “Here are five ways to make sure you’re taking the appropriate steps when borrowing money from friends and family.”
Look at the bigger financial picture.
“Seeking financial help from a friend or family member can cause embarrassment or put the other person in a difficult situation,” Hayes adds. “Before making the question, consider all alternative borrowing options to see if you can reasonably avoid them.” Examples include taking out a personal loan or withdrawing money from your savings, 401(k), or annuities.
Be realistic about how much you need.
“Run the numbers to get a general idea of how much money you really need to borrow,” Hayes suggests. Consider unemployment benefits in your budget if you lose your job, for example. As a result, the amount you need to borrow may be less than what you initially calculated.
Hayes says I know you (and how) you ask.
Identify the people in your life who may be able to provide you financial assistance when you know how much money you need to borrow. She says retired parents, for example, may receive a stable income or have to withdraw from taxable accounts to support you. Alternatively, a well-functioning relative or friend may have enough savings to lend.
Create a loan contract.
On top of that, writing things down ensures that both parties are honest and helps prevent finger pointing in the future that could ultimately damage the relationship. Loan agreements, also known as promissory notes, specify the terms and conditions of the loan, such as the amount you borrow and the repayment schedule.
Prioritize your loan payments.
Hayes notes that paying off your loan, whether it’s from a bank or a loved one, on time should be a priority. She recommends that this be a regular item in your budget. Don’t be afraid to tell them if you run into an obstacle along the way, especially if they depend on your monthly payment.
People are often ashamed to seek help from the government when they suddenly face a financial crisis. However, this is a mistake. Don’t let your ego get in the way of getting the help you desperately need during tough times.
Moreover, we can access government assistance because we paid for it. Let’s take income tax as an example. Your taxes also provided assistance to others, such as education, health care, and Social Security benefits. After all, this is the basis for how our government operates.
In short, it’s important to remember that the same system you’ve contributed to in the past can help as long as you qualify.
Are you eligible for any government assistance programs? Visit www. Benefits.gov to find out. This government website includes resources you can use to access everything from food, housing, healthcare, and childcare.
Just note that you are more likely to qualify for these programs if your income is lower. Also, if you think that financial problems are approaching, they should start as soon as possible. why? Because the approval process can take a long time.
Some of these government programs that you may want to consider include;
- Unemployment insurance. Qualifications and benefits vary from state to state, but if you lost your job through your fault or couldn’t work, you may qualify. Here is a handy guide from The New York Times.
- Supplemental Nutritional Assistance Program (SNAP). People who have gone through temporary hard times due to job loss, illness or other setbacks can get nutritional assistance through the SNAP program.
- US Department of Housing and Urban Development. If you become homeless, or need affordable housing, you will find help through HUD.
- Temporary Assistance to Needy Families (TANF). The TANF, or welfare, program is used by states to help families overcome financial obstacles. Families eligible for TANF can receive housing, food, and childcare assistance, as well as job training.
- Low Income Home Energy Assistance Program (LIHEAP). LIHEAP may be able to help with heating, cooling, or utility bills.
The government also provides scholarships, grants, and loans to eligible students. For small business owners, you may be able to obtain a grant via Grants.gov. There is also a SCORE that connects you to a router to give you guidance.
credit advisory services
These services are available for free or at a low price;
- credit unions
- Guidance offices
- religious organizations
- Not-for-Profit Agencies
You can take advantage of these resources to help you with balance sheet preparation, debt management, student loan advice, housing advice, or bankruptcy advice.
Accreditation with one of these two organizations is crucial when looking for credit counseling;
Charities and non-profit organizations
While funding is limited, if you find yourself in a financial crisis, these charities and nonprofits may be able to lend a helping hand;
- community work organizations. These provide a wide range of assistance, from help with the electric bill to job training. Learn more about community action agencies by clicking here.
- catholic charities. In a crisis situation, this charitable organization can provide financial assistance, cash assistance, or other resources regardless of your background or religion.
- Gradient gives back. To ensure that families going through hard times do not lose their homes, the Gradient Gives Back Foundation was created. It helps families across the country with their mortgage and rent payments.
- Jewish Federation of North America. The organization distributes funds to nonprofits across the country. In addition to helping families in need with rent or energy bills, job training is also offered.
- Ministries of UMC – United Methodist Church. The church-based charity offers a variety of programs. Examples include providing transportation or meals.
- National Aid Association. Although the Aid Association operates across the country, it focuses on meeting the needs of local communities. Classes provide meals, social services, childcare and school supplies.
- net desires. It was founded by a private individual as a non-profit organization in 2002. In the event of an emergency, the organization provides cash grants and free money to help eligible individuals pay critical bills, especially for children and seniors.
- Round-Up process. Many utility and gas companies offer an assistance program called Operation Round-Up. Through this organization and the aid they provide, families and individuals in need can receive energy aid and grants.
- Saint Vincent de Paul Society. The mission of the non-profit organization is to eradicate poverty by providing social services and financial assistance to people in need. Their services include housing, food, healthcare, transportation, and utilities.
If your business requires alternative funding, crowdfunding is a great option. Basically, it achieves two things: it provides a large pool of early adopters and no strings attached cash to grow. You can make your business grow exponentially by running a successful campaign.
But when you’re in dire financial straits, you may also be able to use crowdfunding to get help.
For people who struggle to get back on their feet, fundraising is a great way to ask for help. Fundraising also provides faster access to funds than government programs. Sites like GoFundMe, for example, allow you to use your money during your campaign and not just after it ends.
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