After the Holiday Emergencies: Do You Know What to do When Your Finances are Low

Life after the holidays can be a nightmare, at least for most people. With most of your savings used up during Christmas and New Year celebrations, there is usually not much in the bank. So, at the very least, you need to wait for the January paycheck, which would perhaps go towards settling debts here and there. Then, you have to wait for the February paycheck, and so forth. If you’re not careful, this circus could go on for the better part of the year.

Worse still, bill collectors won’t give a toss about your financial turmoil. The electricity company, if not paid in time, will waste no time disconnecting you from the grid. Banks expect their mortgage and landlords will throw you out of the house without notice if you can’t pay on time.

So, how do you escape all this assuming that you splashed a chunk of your savings during the holiday season? Here’s a simple plan that could work out great.

Pay essentials first

Any personal finance professional will advise you to begin by paying for your basic needs first. The three big ones are food, shelter, and utilities. Ensure that you have enough food for the month. If that means buying a lot of cereals, so be it. You need to make sure that you’re not sleeping hungry. Then, pay the landlord or the mortgage. Even in the heat of all that, you still need a place you can call home. With that covered, you can then proceed to pay for electricity, water, telephone, and internet services among others. Only after that should you proceed to make car payments.

Pay for what would be shut off first

When paying for utilities, the idea is to ensure that nothing critical is shut off in the middle of the month. Professionals advise that you create a list of all bills that you need to pay for that month, alongside the consequences. What bad thing will happen if you don’t pay that bill? Will the electricity or water be shut off? If so, when?  Water, for instance, is heavily regulated and may not be shut off immediately. Typically, you’ll get a whole month’s notice before the service is cut off. The telephone company, however, is at liberty to cut you off anytime. So, pay should be a priority.

Analyze everything

If you’re in a really deep financial crisis, you need to consider every angle. For instance, although rent payment is very important and the landlord can threaten to kick you out after only three days from the due date, the reality is that the process takes a bit of time which could buy you one or two months. If you will be able to pay the rent after those two weeks, you can get away with not paying for now. This is also the time to assess whether borrowing would be a good idea.

In a nutshell, you need to carefully plan your way out of the problem so you don’t end up in a worse situation. These three tips would be an excellent starting point.