What a crazy time we are living in right now. I just read a news article this morning that 3.28 million people have already filed for unemployment. And my husband is one of them. He’s really the only one working and it’s scary now with all of our bills and only a small portion of income will be coming in from unemployment benefits (when they do come). So right now we are in the middle of a little financial crisis as are many other people.

So how do you deal with a financial emergency when you become unemployed?

Here’s how we’re dealing with unemployment and an unexpected financial emergency.

What to do in a financial crisis.

In a perfect world, you would have paid off all of your debts and built up an emergency fund of 6 to 12 months of expenses. So when something happens and you are out of work. you’d be able to handle any expenses stress-free.

But I guess the world is not perfect…far from it, as we are experiencing an unprecedented time in history where not only is our country in a crisis, but so is the entire world.

I wish I could say that we’ve saved up an emergency cash fund that would pay all of our expenses for 6-12 months, but we only have a 1-month emergency reserve. I always figured that we could use our equity line of credit in case we needed to.

And I guess we are lucky that we do have one that we can use so that we don’t get into credit card debt.

But now, looking back, I do wish we had the cash so that we didn’t have to get into any kind of debt.

But right now, we are in emergency mode along with a whole bunch of other people who have found themselves out of work because of this global pandemic.

So what should you do if you find yourself facing a financial emergency?

Take care of your most important priorities first.

Right now you need to prioritize your expenses. The most important things to focus on in a financial emergency are the following:

* Food

* Utilities

* Shelter

* Transportation.

In that order!

When you only have so much money to go around, these are the most important things you need to worry about having money for.

First, make sure that you can feed your family.

Then make sure you can keep your lights on, your water running, and your heat on.

After you’d taken care of your utilities, you pay your mortgage or rent.

And lastly, make sure you pay your car insurance and gasoline so that you can get around if you need to. And make your auto payment if you still owe on your vehicle.

Minimize all of your expenses.

While you’re taking care of your most important financial obligations, it’s important to focus on your spending.

Keeping your expenses as low as possible right now is super important and will help stretch your dollar. Start to question your spending. Every time you spend your money, you need to ask yourself if it’s absolutely necessary to do so.

Are there things you can do without for the time being?

And here’s a fabulous article by The Prudent Homemaker about cutting expenses when you think you have nothing left to cut.

Here’s what we’re personally doing to manage our spending as we go through a financial emergency.

Right now, my husband’s unemployment benefits will not cover all of our expenses. So we’re trying to do what we can to save money where we can.

Saving money on groceries. We have a pantry and freezer full of food so we’ve decided that we will not be shopping for food unless it is for basics like milk, eggs, butter and other essentials that we may run out of. But we have tons of other stuff that we will be focusing on using up so that we can save money on groceries.

Saving money on car insurance. Since my husband is now home for an uncertain amount of time, I called our car insurance and canceled the insurance on my car. We now only have insurance on my oldest son’s car and my husband’s car. If my oldest son wasn’t working, I’d cancel that insurance too. This is saving our family $100 a month.

Well, I actually placed my vehicle into “storage” and didn’t actually cancel the insurance as I was told if I took it off completely because we weren’t using it, we’d have to surrender the license plate to the state and then repurchase new plates.

Work out something with our mortgage company. After being on hold for 1.5 hours, I finally got through to talk to someone at our mortgage company. I will be receiving a call back within a week, but they are working with customers who have been directly affected by the COVID-19 pandemic and are offering a few solutions. One of which will be to put payments on hold for a specific period of time. I’m not sure of the details and will update this post once I get the information.

They are more than happy to work something out with you so that you don’t default on your mortgage. When I spoke with a rep, there were over 2300 such cases that were waiting to work with a specialist. And I’m sure that number will climb much higher.

Saving on your phone bill. Now may be a good time to switch to a company that has better rates. Perhaps their service areas are not that perfect, but right now it’s all about saving money. We used to use a company called Republic Wireless. It was cheap and it was decent.

I’m sure you can find companies that have cheap phone plans for the time being and then switch back to some of the better companies when your financial situation allows.

What to do when you don’t have money to meet all your needs?

The one thing that I WOULD NOT recommend is that if you have any retirement savings, leave those alone no matter what. There are many other options that may be less costly. If you pull money out of your retirement savings like a 401(k), it will be even more costly than having to rack up credit card debt.

The government will keep about 25% of that for income taxes, then you get penalized 10% for withdrawing before you are of retirement age. And then you also will miss out on the long-term benefits of compound growth in the future.

But here’s what you can do to help you deal with a financial emergency.

Consider a home equity line of credit: If you own a house and have equity in your home, see if you can’t get an equity line of credit to help you through this financial emergency. What good about this is that the interest rate to borrow money against your house is low.

Get a small personal loan. Go to a bank or credit union and see if you qualify for a personal loan. The interest rate may not be as good as an equity line of credit, but it will be better than credit cards.

Use your credit cards…wisely. If you read my blog, you know that we paid off $137,000 of consumer debt, a huge chunk of that was credit card debt. So I’m really not a fan of accruing credit card debt, but in case of an emergency, I think it’s okay.

Using your credit cards will cost you the most amount of money because interest rates will be higher than an equity line of credit or personal loan UNLESS you have a 0% offer. In which case, that would be great!

The most important thing to consider when using any of the above-mentioned sources of income is that you only use them to pay for necessities.

I think that people get into a lot of trouble when they use their credit cards (even in the case of an emergency) by continuing to spend money like they did before their emergency. You can use your credit cards, but only for absolute necessities!

Ask family for a loan. Just thinking about this option makes me feel uncomfortable. I don’t know why, but asking family for money just feels awkward to me. But if you have someone that has extra cash and you feel comfortable with it, then why not?

Just make sure you are responsible and will pay the loan back when you can. I’ve heard about many situations where relationships have been ruined over such things.

I would definitely encourage you to be as frugal as possible during your financial emergency. I would rather do without most things, then get into debt again.

Stay positive and find something to be grateful for.

It’s a scary time right now for everyone. There are so many unknowns right now. A lot of people are feeling upset and discouraged nowadays. But it’s important to stay positive and find some things to be grateful for even amidst such world pain and chaos.

Remember that this too shall pass…hopefully sooner than later.

As Chicago Cub’s player Anthony Rizzo said:

We just have to wait and stay healthy right now.

And remember to “take your MEDS.”

M– Meditate or pray every day.

E– Exercise Daily – don’t have workout equipment, take a walk outside.

D– eat a good Diet- refrain from stress eating.

S– Sleep – focus on 7-8 hours nightly.

(Someone posted this on our local nextdoor.com board. I loved it and hope you do too.)

I wanted to share a few things that I’m grateful for today:

My comfortable home and a big backyard where I can spend time gardening and out in nature.
That I’m able to spend some extra time with my loving husband and kids.
For technology like Facetime and WhatsApp where I can still hang out, face to face (not in real life) with my friends and my parents who are thousands and thousands of miles across an ocean from me.
That our pantry and fridge and freezer if full of food.