How can you come out on top when life throws a curveball (or two) at your finances? Whether you're hit with a job loss, sudden illness, divorce or a major storm, the heartache quickly filters down to your wallet.
But according to Stephen Pollan, a Manhattan lawyer and author of the forthcoming book Lifelines for Money Misfortunes, there's good news: Of all the setbacks you face in life, those related to your finances are often easiest to overcome. "You're in charge of your financial situation, and you have control over what you spend, and to some extent, what you earn," he says.
Chris Gardner, whose life was played out on the big screen by Will Smith last year when his best-selling autobiography, The Pursuit of Happyness, became a major motion picture, couldn't agree more. He recovered from a stream of setbacks- lack of a steady income, a broken relationship, parking tickets and homelessness - to become a trainee at Dean Witter Reynolds. Today he's CEO of his own brokerage firm, Chris Gardner International Holdings.
Here are their suggestions:
CALL YOUR CREDITORS. If you immediately inform the mortgage lender, bank or credit card issuer that you're having a rough time, you'll receive a lot more sympathy. Explain that you're taking full responsibility for putting a plan in place to get them their money, and then get back to them quickly. But don't call up every month singing the same tune and be prepared to keep whatever promises you make.
MAKE MORE MONEY. Every little bit counts, especially when you're strapped for cash. Moonlighting, working an hour of overtime each day and selling a few unwanted items on eBay are all great ways to scrape together some extra money. Cruise a Web site like craigslist.org for freelance or short-term moneymaking opportunities. And assuming your financial strife doesn't stem from the loss of your job, Pollan says that your first stop might be your boss' office to ask for a raise. Just be prepared to explain in detail why you've earned it.
CUT YOUR SPENDING. Everything unnecessary waits until your head is back above water, including dining out, entertainment and trips to the mall. Doing without will give you the extra motivation to get caught up.
ASK FOR HELP IF YOU HAVE TO. Take friends and family up on their offers to assist you. Putting your pride aside is well worth it if it means saving your credit score. A couple of unpaid babysitting hours so you can squeeze in a bit of overtime can be really helpful, as can an offer to help run errands. And if you're in the market for a job, put your feelers out there.
ONCE YOU'RE BACK ON YOUR FEET, PLAN FOR NEXT TIME. People who have emergency funds are far less likely to take a dive every time an extra bill comes their way. When the unexpected pops up, you can dig into your emergency savings for living expenses instead of whipping out the plastic. Think of it as borrowing from yourself instead of the bank. Aim to have three to six months' worth of expenses stashed in a savings account that's easily accessible but will bear you some interest.
- MAKE SURE YOU HAVE INSURANCE COVERAGE IN ALL THE RIGHT PLACES. If you have anyone depending on your support, you need life insurance and - if you can afford it - disability coverage. And everyone needs health insurance, no exception.