How to Prepare for Financial Emergencies

The Church of Jesus Christ of Latter-day Saints has a great web page on providentliving.org about how to handle handle family finances. This web page has many links that will take you to topics on:

• Paying Tithes and Offerings
  
• Avoiding Debt
• Using a Budget
• Building a Reserve
• Teaching Family Members

I like what our First Presidency has to say on the topic:

"We encourage you wherever you may live in the world to prepare for adversity by looking to the condition of your finances. We urge you to be modest in your expenditures; discipline yourselves in your purchases to avoid debt. . . . If you have paid your debts and have a financial reserve, even though it be small, you and your family will feel more secure and enjoy greater peace in your hearts."
—The First Presidency

Click here to go to that web page.

Here's another post on how to handling financial emergencies from:

www.LivingOnADime.com

Click here for the link that was posted on March 9, 2010 on how to be financially prepared. Below is a cut and past of the article.

How to Prepare For Financial Emergencies

The best way to survive unemployment or any financial challenge is to be prepared ahead of time. Many of us prepare for all kinds of emergencies -- keeping an emergency supply of food, first aid kits and other emergency supplies. Here in Kansas, we keep one room prepared where we can go in case a tornado hits. But few of us prepare for something that is almost guaranteed to hit every one of us at some time-- unemployment.

I hope that today's ideas will inspire you to prepare for a financial emergency that is sure to happen at some point in your life in the same way you prepare for other emergencies.

As hard as it was at the time, I can honestly say that I'm glad I had the various experiences that I had with unemployment. I really wouldn't be the person I am now if I hadn't. At the time, you wonder why God is allowing these things to happen in your life and think it is so unfair but, years later, you find out many of these things taught you something that really helped you in the long run.

If my husband hadn't been laid off the first time, we wouldn't had started a business he loved. That business enabled him to be at home with the kids and me. I restarted that same business years later, which helped me save my home and helped us avoid living out on the streets. In fact, this web site wouldn't exist if it hadn't been for the job losses I experienced in my life and the things I learned from them.

The best way to rid yourself of fear and panic is to be prepared for a situation. I love the story of Joseph in the Bible (Gen. 41) where God told Joseph that there was a famine coming. What did Joseph do? Well, he didn't pay any attention to the news of the day, nor did he worry about what others were saying. He also didn't just sit there knowing that tough times were coming and say, "Que Sera Sera, what will be, will be".

He started preparing-- preparing in a big way. Maybe we don't have grain elevators to fill like he did (Well, on second thought lots of people in Kansas do :) ), but we can take practical steps now to prepare in case a "famine" should come in our lives.

I am so tired of listening to people moaning and groaning about what is going to happen to the world financially. Stop complaining about it! Take the time and energy you are wasting pointing out how awful things are and do something constructive about it in your life.

Here are a few things you can do to insulate yourself against potential financial emergencies:

• Get rid of credit card debt. I know I sound like a broken record, but credit card debt is something that can make or break you when money is tight. Once we had a gas card and furniture card, both of which were maxed out for a total of $500. The thing that hurt us the most when we had a job layoff was that credit card debt. We could have paid most of our bills with a part time job, but each month we had to make that credit card payment. It almost broke us-- and our debt was nothing compared to some others.
  
  Don't take this lightly. You can lose everything just because of that debt. I don't care what you need to do. Get serious and aggressive about paying if off. Visit our web site and refer to our books where we give you thousands of ideas about how to do it.
  


• It may seem impossible but stop buying on credit now. Lots and lots of people don't buy on credit and do just fine. You can too. If you don't have cash to pay for something, live without it until you can save enough for it. We can live without most things that we think we can't live without. My daughter and I have each gone through a winter without a refrigerator until we had the money to buy one. It was a pain keeping the frozen stuff in the cold garage, but we survived.
  


• Pay off your mortgage. If you are barely making your house payment, you may have to consider buying a less expensive house in order to accomplish that goal. The thing that saved me more than once was never buying a house I couldn't reasonably afford. Also, except for a couple of years after losing a lot of money on one house sale, I have had my house paid off since I was in my middle 30's. You can usually make enough money for minimal food and utilities in tough times, but it is the house payment that can make or break you. Pay it off and you won't have to worry about that anymore.
  
  During the depression, the people who survived the best were the ones who had their homes paid for and had no debt.
  


• Save. It's a toss up when it comes to deciding whether to save first and then pay your mortgage or visa versa. For me, having my mortgage paid lifted more of a burden from me. Additionally, the interest I made on my savings was so much less than the interest I paid on my mortgage that I was better off getting rid of my house payment.
  
  Different people feel differently about their situations so do what is most comfortable for you. The most ideal thing, of course, is to pay your house off and have a small nest egg.
  
  Don't panic when you hear the word "savings". It is so easy to think "there is no way I can save" but even if you save only $5 a week, that is something. Most people waste significantly more than that each day. I found out that having even an extra $25 helped because it could buy an awful lot of bread and bologna to feed us.
  


• Stop worrying about things like college funds until you can get your finances under control. Those are nice to have but they aren't as big a necessity as most people think, especially when you're trying not to lose your home. If your child wants to go to college, he can go to a community college, get a scholarship or even work to pay his own way (What a concept).
  


• Learn useful skills. Learn how to do basic sewing, home repair, car repair, cooking and yard work. Learn to grow a garden. You may not have a need to do these things now, but someday you could find yourself thinking "I wish I knew how to ____, because it would save me so much money." Teach your children life skills as well.
  


• This last suggestion may seem a little odd but install a wood burning stove in your home if you don't have one. For those of you in colder climates, this can save significant money on your heating bill.
  
  When we were in our toughest times, I don't know what I would have done if I hadn't had a wood burning stove to heat my home (or at least part of my home). The heating bill would have eaten me alive, but I could always find free wood. Even when I had to have the heater on to keep the pipes from freezing, I could keep it low enough to save me huge amounts of money.
  
  

There are so many things in our lives that we have no control over. Life happens, but there are some things we can prepare for and unemployment is one of them.

Get serious with your money and stop being foolish with it. God didn't give us prosperity solely to satisfy our "wants". It is important to use it wisely, to provide for your needs in good times and bad. Use the money you have to build a strong foundation for you family so, when the storms come, your family will be safe and can ride it out better.

Don't be selfish, spending too much of your money on things that give you instant gratifications and pleasure for the moment. Yes, you do enjoy that big screen TV, that golf game or those expensive shoes and purses, but what will you feel like further down the road when you have lost your job and have no clue on how you are going to save your home or feed your kids?

People who aren't prepared react very badly to losing their jobs. They play the blame game. It's the fault of the boss, the company, the government, the bank or these hard economic times. We play the blame game when we are caught doing something foolish or wrong. You may say, "but I did nothing wrong by losing my job." No but did you do something foolish by failing to prepare in case you did lose it?

I'm not saying any of this to judge or condemn anyone. You know your own circumstances. I'm just telling you this to try and open your eyes to the importance of being prepared, and not just because of what is going on now. Unexpected things happen all the time, but the more prepared we are, the better equipped we are to handle any financial challenge that presents itself.