A revolving line of credit (like a credit card or a personal line of credit) is generally harmless on its own. The financial whirlwinds start when multiple revolving debts are met with too many sick days, a job layoff, or an unexpected medical expense. If your personal finances are starting to look like a cyclone of disaster, then here are a few ways to escape with your life (and your credit history intact).
Four Ways To Escape A Financial Cyclone:
1) Stop Fueling The Cyclone
If you stop spending money you don't have, the financial cyclone will lose its power. Instead of growing stronger with every charge, new account, and balance transfer, your cyclone will lose speed. The cyclone will slow down and begin to lose power over your daily life.
Stop accepting increases on your credit limit, rotating your debt from one creditor to another in hopes of attaining a lower interest rate, and using your available credit as soon as you make a payment. By continuing to make payments without charging anything new, you will make progress.
While requesting more credit is not advisable, it is sometimes necessary for escape from a cyclone. If your finances are hanging on by a thread, consider taking out a pay day loan to help you weather your immediate financial danger. A pay day loan from places like EZ Check Advance, that is repaid within two weeks is less dangerous than opening up new credit card accounts (because you can continue charging on credit cards after they are repaid), and nearly anyone can be approved for a pay day loan.
2) Lasso In Some Help
Now is the time to be resourceful. What can you offer others in return for their help with your cyclone's building pressure?
- Bring in a roommate to alleviate your rent or mortgage payment every month.
- Move your mom, dad, or a friend into your home to reduce or eliminate daycare costs.
- Allow travelers to crash at your home. You can pull in cheap hotel rates for the extra bedroom you aren't even using.
- Have a scout list your home for a movie. Movie companies pay $500 to $1000s of dollars for every day of filming in regular homes, and they put you up in a hotel or other accommodations while they are in your home. (Your home will be returned in pristine condition, which may be better than it was before they got there.)
3) Evacuate The Premises
If your financial storm is showing no signs of slowing down, then it is time for you to start seriously considering evacuating. Moving to a less expensive apartment or property can open up a lot of room in your budget. If you are a homeowner, consider renting out your home and living somewhere cheaper until your financial storm has passed.
4) Stabilize Your Position
It is very important that you stabilize your position financially, or the cyclone is going to take you and everything you own with it. Stick to your basic needs when it comes to spending: food, shelter, and electricity. Cut out the extras until the worst has passed, like cable, large data plans on your cell phone, and dining out.
When you are in the midst of the storm, you may be tempted to treat yourself "while you can." If you can't resist a splurge, ask your friends to meet for coffee instead of cocktails. Invite people over for a potluck dinner instead of dining out, and don't order expensive menu items if you are at a restaurant. (Chicken and pasta dishes are typically cheaper than steak, and ice water is always free.)
As you start living off less money than you earn, the cyclone will fizzle out completely. Adjusting your spending and finding ways to live more cheaply allows you to regain control of your money quickly. When your financial world does stop spinning, you should feel motivated to bulk up on financial armor. Saving 10% or more of your income will make it possible for you to weather future storms (without turning to revolving credit).