Every day you'll receive our family budgeting, money management and personal finance "tweets" - you'll have a better financial education in 140 characters or less.Facing a Financial Crisis: Your First Step
March 9, 2009, 9:43 am
Why you should discard that plastic before you do anything else
Whether you face sudden job loss, small business failure, a medical emergency, or some other financial crisis, your first response should be the same.
Cut up your credit cards.
It’s all too tempting for people who are struggling financially to use credit cards to survive. You may think it’s impossible to live without credit, but millions of people do it. We’ve spent 35 years showing people how.
It’s not easy, but it is possible. It takes dedication and self-reflection, and a willingness to make the commitment to change. If you’re facing potential unemployment, or some other financial crisis, then it’s all the more essential that you make it your first step to stop borrowing on credit.
Some people, when faced with tough financial times, use their credit card as a substitute for income. They use it to put gas in their car, buy groceries, and pay monthly bills. We can’t implore you enough to avoid this mistake.
Using credit as a substitute for income will turn a bad situation into a disaster, every time. We know it will be tough to weather a crisis without access to credit cards, but we think most people are survivors; you’ll find a way through without resorting to increasing your debt. In fact, using credit cards during a financial crisis may prevent you from taking the appropriate measures to cut your spending and find alternate sources of income to get by.
This is why we want to urge anyone who is facing a financial emergency to get rid of your credit cards first. Do it up front, before you get used to using them for everyday expenses.
If you do that, you’ll still have some tough choices to make, and you may struggle with your financial situation in the short term. But we urge you to stick with it and explore ways to make ends meet without borrowing. Eventually, you’ll get a handle on things and you’ll be able to weather the crisis.
And when your financial situation improves; you’ll be able to face a brighter future without a mountain of credit card debt hanging over your head. Hopefully, you will also have learned valuable lessons about how to live within your means and prepare for any unexpected financial emergencies you may face down the road.
But before you get there, don’t forget the crucial first step: stop using credit cards!
Complete our
credit debt and household budget online worksheet. It’s secure, confidential, and the first step toward eliminating credit debt.
