1.26.21

If it all went wrong tomorrow

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Girl wearing coral shirt leaned over a laptop with hands on her head in despair
Scott's financial emergency game plan

In short, I’d try to reduce my monthly expenses so that I’m covering basic “needs” rather than “wants”—and know that by meeting monthly payments, my credit score will gradually rebound. All the while, I’d work on getting myself back to financial comfort by finding my next career while I grind away at whatever pays the bills.

by guest writer Scott Dobson
Consumers @Work Manager

I lead our Consumers @Work team and spend a fair amount of time talking with members on strategies to improve their financial wellness. To do so, I’ve focused on my own family’s financial wellness—practicing what I preach by reducing debt, saving for emergencies, investing for the future and so on.

Recently though, I was asked by a colleague what I would do if it all went wrong—if tomorrow morning I woke up with no job, poor credit and no emergency savings. This would be my plan:

  1. Take a Financial Inventory
    • I’d sit down and take inventory of every bill I have. I would want to know the next due date, the minimum monthly payment, the late date and the late fee, as well as what would happen if I couldn’t make a payment.
    • Next, I would look in my fridge and pantry and see how long I could stall grocery shopping—and also think of other expenses I might have in the next month, such as property taxes or life insurance premiums or any other non-monthly bill.
  2. Find Income
    • Can I become an Uber driver? Can I work nights at a factory while I search for my next career choice during the day? Can I find a part-time gig? I’d be searching for fast income, a paycheck next Friday, not the ultimate career path.
    • I’d make a list of things to sell on Facebook Marketplace, assign a value and make sales.
    • Although I’d hate it, I’d also assign a value to all my toys—my motorcycle, bikes, hobby stuff, etc.—and prepare myself to sell it all.
    • I WOULD NOT consider my retirement account as a source of income at this point. Liquidating retirement accounts would be disastrous, and I would only consider this as the very last resort.
  3. Communicate
    • I would immediately communicate with lenders. Most lenders have programs and ideas to help you stay in good standing, but they need to know you need help BEFORE you get behind on bills. Utility companies will work with customers on a budget plan, as will doctors and hospitals for most medical bills.
    • With my other bills, like cell phone, internet, cable, etc., I would want to know if I’m in a contract or if I can change or cancel my plan.
  4. Prioritize and act
    • Cover food and shelter first: We have to eat and have a place to live, so those are my first priorities.
    • Focus on building my credit score by making on-time minimum payments to all of my creditors.
    • Reduce any monthly obligation I can. No cable, the most basic phone plan, no going out to eat, etc. Could I trade in my car for a cheap one with no monthly payment?
    • Increase my income: How can I get back to my pre-disaster income level?
    • Protect long-term investments. How can I keep this short-term setback from affecting my long-term goals?

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Scott's financial emergency game plan

In short, I’d try to reduce my monthly expenses so that I’m covering basic “needs” rather than “wants”—and know that by meeting monthly payments, my credit score will gradually rebound. All the while, I’d work on getting myself back to financial comfort by finding my next career while I grind away at whatever pays the bills.

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