All of us have experienced a purely temporary financial crisis at some time or other. Such a situation can be readily overcome by going easy on discretionary spending on factors such as impulse buying and entertainment.

This means that after a few paychecks, you’re back to normal. However, it is dangerous to treat a severe personal economic crisis, in the same way.

A serious financial crisis needs much more than a passing attention.  If your financial crisis is undermining your capacity to pay your utility or tax payments, mortgage or essential insurance, you should take appropriate action to resolve the problem immediately.  This is easier said than done, as most of us have never experienced job loss and credit problems that have become a part of the present economic decline. So what is to be done?

Things to do in a serious crisis

The very first thing to do is to do away with all needless spending right away.  However, this is not as easy as it sounds. Have you any idea just where your money ends up every month? If you spend $5 on candy or gum every week, it doesn’t seem much, but in fact it is $250 per year.

You might be sending your clothes for dry cleaning which is highly expensive, when you can just as well wash and process them yourself, with special detergent products right at home, thereby saving a lot of money in the process.

Even for short errands you might hop into your automobile using precious gas, instead of containing all your various errands into a single trip every week.

Do you often visit Starbucks or buy food on your way home?  If you pause a moment to take stock of the number of impulse purchases you make whenever you visit a department store or grocery, you’d surprised. Besides these, you could be spending money on personal care, high end brand names instead of store brands, as also a lot of other purchases that are simply non-critical.

It doesn’t stop there! Do you actually need all the phones you have? Can’t you find a cheaper provider of internet services?  If you raise your deductibles, will it reduce your insurance costs?  Do you really watch all the 160 cable TV channels that you subscribe to?  Why don’t you visit your local library instead of buying magazines and books?  Are you really in the habit of reading the newspaper that you subscribe to?

So many questions, but that’s the way it is.

‘Found Money’

Cutting down on spending on at least some of the things mentioned above can provide you with ‘found money’ which might be sufficient for you to solve your present cash flow crisis.


Whenever a financial crisis looms over you, the best response is to try to find a second or even a third job or look actively for other means of making money.

In case you decide to do work for extra hours to generate additional income, the ‘found money’ that you have already found is sure to add to the pool of funds you can use to solve a cash flow problem.  By taking charge of the way you spend your money, you’re actually authorizing yourself to be in charge of your financial life.

You can’t make a perfect thing of your life however hard you try. Challenges and mistakes are part of human lives and so accept them as they occur. In this way you can easily improve on the things you already have. It only serves to extend the pain if you tend to worry and complain. In a way, these mistakes can be a blessing in disguise as they provide you an opportunity to be future-ready. So, always be prepared for unforeseen mistakes to happen.


Set priorities to your obligations and decide on the ones that are most crucial. Remember, you have to go on living. Things like car payments, mortgage, groceries and utilities are a lot more essential than flashing credit cards and swiping them whenever you can.

Seek ways to cut down expenses without involving yourself on long term contracts like cell phones and Cable TV. This can be done only if you’re willing to change your spending habits. In short, don’t buy anything that is not really necessary in your day-to-day living.

Need for a backup plan

Always have a backup plan ready. Knowing in advance that you are capable of overcoming a financial crisis, will take the panic out of making the necessary changes. What is your real enemy is panic and not the actual crisis.

Do not try to ignore or wish away the situation you are in, as it is always wise to be pro active. The name of the game is cut expenses as well as pay off your debts.

To conclude, treat the crisis as a call to action. The earlier you catch the crisis, the more choices you have to overcome it. Plan a wealth plan that is crisis proof, early in life so that you are able to weather any potential storm that materializes on your fiscal horizon. Remember, it is during difficult times that more wealth is generated. After all, just saving your credit tail in not enough, you should gain some wealth too when the storm bursts upon you.

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