Reducing Expenses During a Sudden Financial Hardship

Published June 2020

Financial difficulties can be challenging. If you suddenly find yourself in a situation where you have a bevy of bills to pay, a lack of funds, and you aren’t sure how you can pay these monthly bills, then you understand financial hardship. Financial hardships occur when you lack the money to pay for your necessary expenses, and taking on debt or missing payments might seem like your only solution. Many Americans are currently experiencing these types of issues, so know that if you are in this position, you are not alone, and you don’t need to feel embarrassed. Instead, there are some steps you can take to help yourself out with this type of situation.

How to Handle a Financial Hardship

We know that things probably feel worrisome and stressful right now, but don’t fret. There are options out there that can help you get through your difficult times. Below we’ll cover some of the things you can do.

Cut Back on Your Expenses

One immediate thing you can do to relieve yourself is to figure out ways to cut back on your monthly expenses. By cutting back on something, you can control your cash flow problem and prevent it from becoming any worse.

To assess what’s going on with your bills, you first need to sit down and make a list so you can see what you are spending in all areas of your life. Then, from that list, you’ll need to start slashing things out to help you save some cash. Although you might initially think to do this won’t save you much money, any amount of money that you can use to pay off bills means you are headed toward some type of financial recovery.

First, figure out ways you can reduce your fixed expenses. That means things like your housing, utility, and electricity bills. You can look at the price you are paying for rent and compare that to other places to see if you are overpaying, or if there is a cheaper place where you can live. Or, you can cancel your cable bill and apply to a more affordable service like Sling to save on some monthly expenses.

You can also figure out ways to bring down other expenses, like grocery, transportation, and entertainment bills. Instead of heading off to the grocery store first, try getting what you need at a local 99 cent store first. Or only buy food at the grocery store when it’s on sale. You can carpool with friends and cut out the entertainment budget.

If you can bring down the expenses of your debt, that can also help you with your cash flow problem. For example, if you can pay off the credit cards with the highest rates first and work down from there, you’ll start seeing an increase in monthly income after you pay down those debts first.

Cut Down on the Entertainment

You’ll need to figure out ways to cut back on your entertainment budget—but don’t worry. You don’t have to stop having fun from time to time. It’s never fun to cut back but reducing what you are spending on your nights out can go a long way to paying down your debt. Consider getting rid of subscriptions you don’t need, like certain TV services. Stop spending money on things like clothes, takeout, or expensive coffee. Instead, prepare food at home and search the internet for budget friendly meal ideas.

Don’t Stress Shop

Most people like to be prepared but be careful with overpreparing. You don’t want to overdo your budget when you are at the grocery store. It’s better to look at what you have first, make a list, and then head to the store. Don’t head off to buy more food without a plan. If you can make grocery lists and take account of what you already have, you’ll wind up saving plenty of money in the long run.

You’re also going to have to stay away from online shopping for unnecessary items. To make it harder for yourself to purchase things, remove your credit card information from all your usual sites. That way, you’ll have to take extra steps to spend money.

If you feel like this advice is a bit overwhelming, don’t worry. Search online for a free budgeting app that suits your situation. They can help track spending patterns and help you cut back on some of your existing bills. Using a budget-friendly app is a great way to figure out how to balance the money you have in your account.

Financial Hardship Assistance Programs

If you’re really in a bind, you can also apply for some financial hardship assistance programs. Sometimes using these programs can be what you need, and they can help you get out of your financial rut quickly. These programs help you manage your bills when you are in an unfortunate position to do otherwise. For instance, if you are struggling with your student loans, you can get on a twelve-month deferral program to give you time to get in a better place with money.

Sometimes, the IRS will allow you to use your retirement programs, like taking money from your 401(k) during financial hardship. Of course, it’s never really a good idea to make money out of a retirement program, but if it’s between that and losing your house, we understand. If you owe any outstanding debts to creditors, you can consider writing a letter to them, or even calling them. Some credit card companies will work with you and reduce your monthly bills during a tough time if you qualify for their programs.

Debt Relief Options

You can also seek out some debt relief options that can help you get some help if your cash flow problem continues. If you hit this stage, you’ll want to evaluate your options and figure out a new plan. If you feel that your struggle is going to be permanent, you may need to consider some debt relief options to help you get back on your feet. If you’d like to explore what debt relief options are available to you, start with a free debt analysis with one of ClearOne Advantage’s Certified Debt Specialists at 888-340-4697.

Final Thoughts

A study done by Bankrate says that only 40% of Americans have savings that could help them out in case of emergency. That means 60% of Americans are in the same situation as you, so don’t feel embarrassed about experiencing a difficult time. Sometimes, life puts us in a tight place, not through any fault of our own. Thus, using strategies to try and help you through your difficulties provides you with the best options.