Welcome to the final instalment in this series on extreme budgeting.
Last time out, we looked at ways to reduce your expenditure to match your current level of income, even if your income has been reduced. But what if that’s not enough? What if, despite your efforts, you still find yourself in a bind. That’s where special measures are required.
This is the final, and most extreme step in our 4-step lockdown financial survival guide which looks like this:
Phase 4 - Special Measures
There is no doubting some of the below steps are fairly extreme, hence why this is the final step in this 4 step process. If you haven't already, I would suggest you go and re-visit steps 1-3 and make sure you have really actioned all of the advice found there before you begin implementing the steps below.
Assuming that you have done everything else possible, including thinking about working a side hustle to make some extra money, if you are still in a situation where you can't make ends meet, that's where these special measures can be crucial.
Although it can be uncomfortable to do so, before you take any of the actions further down this list (some of which may damage your credit record or impact on your future chances of getting a mortgage), you should think about the people around you who may be able to help.
Perhaps one of your friends or parents could lend a financial hand while times are tough. Of course this is a big ask, and you shouldn't do so lightly, but a helping hand from a friend or family member to tide you over until things improve can be a lifeline.
Just make sure you always remember the favour and pay them back as agreed - money is not worth spoiling a good relationship with a friend or family member over.
If you are not able to keep up with your payments on rent, the mortgage or any of your other commitments, burying your head in the sand won't help.
It can be tempting to just 'try not to think about it', but that will only land you in more trouble later on. If think you are going to miss this month's payment or you can't afford the full payment, you should reach out and speak to the person (landlord) or organisations (mortgage lenders, utility companies, credit card lender etc) involved.
Most companies have at least a tiny bit of compassion in these tough times and you may be able to negotiate a payment break, or at least a reduction in payments for a few months to help you get through.
Having an open and freak conversation with whoever you owe money to will almost certainly lead to a better outcome. You may be able to avoid any damage to your credit record and it just feels better being open and honest about where you are and what you can pay rather than watching the red bills pile up on the mat.
When I work with people who are struggling financially, they often don't know about or fully understand the support that is available to them through Government benefits or other support packages.
This is more true now than ever. During the pandemic, Governments around the world have launched a bewildering array of different financial assistance packages to help people through the worst of the economic pain.
It is important that you research and understand any financial assistance that might be available to you and ensure that you maximise the value you get from these schemes.
If you need help, there are charities and other organisations that have experts on hand to assist you - which brings us nicely onto number 4...
There are many helpful debt charities that can help if things are getting really bad. These charities can sometimes even help you with the negotiation process we described above. Make sure that you understand what the charity is doing on your behalf (and especially if there is any risk to your credit record).
Although some people might find it embarrassing reaching out for help, the people that work at these charities would have seen it all before and they have the skills and experience to make a real difference.
If things are hard right now, this one is going to be tricky, but you have to believe that things will get better. Tough financial times fortunately don't tend to last forever and with the right mindset, you can make a real difference to your future financial fortunes.
If you have suffered a job loss or a reduction in hours because of the pandemic, help is on the way. The vaccine programme is now rolling out across the world and many countries are rolling out significant economic support programmes.
The darkest hour is often before the dawn and hopefully you will find better economic times sooner than you know.
If you need help - reach out to the financial freedom community - a simple Facebook post could give you access to hundreds of helpful people from around the world ready to share their advice and experience.