SURVIVING AN ECONOMIC CRISIS
As a result of the current economic situation,
millions of Americans are out of work and/or struggling to make ends
meet. Featured below is some advice on what you can do to help you
and your loved ones get by.
Emergency Funds Should Be For Emergencies Only
Most Americans do not have any sort of funds saved that are
specifically allocated for emergency use. If you don't have any
emergency funds, try and start saving some. You should attempt to
put aside enough money to cover the cost of 3-6 months of living
expenses. This money should only be touched during times of
emergency, i.e. you lost your job, you got hurt and can not work,
etc.. If you do have to spend any of your emergency reserves, look
to replenish it as soon you can.
Do No Apply For Any Type of New Credit or Loans
Currently, banks have tightened their belt in regards to what
credit types they are lending to and how much money they are
lending. Anyone that does not have excellent credit is probably
going to get denied for any type of loan or credit they apply for
(unless you have a
with excellent credit). And even if you are lucky enough to achieve
an approval, the interest rates associated with your loan are likely
going to higher. But, don't even bother applying for loans and
credit when you know approval is not likely. Submitting applications
for credit is going to negatively impact your
making it more difficult to get approved in the future. Bottom line,
avoid applying for any loans and credit during this economic crisis.
Keep Credit Card Balances Low
Credit limits have been slashed by card issuers over the past year.
It is likely that if it has not already happened, you limit is going
to be cut very close to your current balance. This puts you at risk
for going over your limit and incurring fees, higher interest rates
and a damaged credit score.
A good idea would be to check your balance and
your credit limit before using your credit card. Doing so will
ensure that you don't unnecessarily exceed your credit limit.
The best thing you can do is maintain a zero
balance. This will all but guarantee that you don't have to deal
with any of the negative effects of a decreased credit limit. Get
more info about
using credit cards wisely.
Be Alert of Increased Interest
Credit card companies make their money from the interest rates they
charge. Most credit card agreements have a 'universal
default' clause. This clause allows your creditor to increase
your interest rates whenever they want, without reason.
You will receive a letter from your credit card
issuer if they have decided to increase your rate. In this letter,
you will be provided with the option of opting-out of the higher
rate. If you decide to opt-out, you will need pay off your total
credit balance (at the old rate). It is important to note that once
you opt-out and pay the balance, your account is going to be closed
and you will not be able to use the credit card anymore.
Always Live Within Your Means
This rule should be followed regardless if you are experiencing an
economic crisis or not. A good idea would be to establish a
good budget will help you with your spending. Avoid making any
unnecessary purchases so that you don't have to spend any of your
savings or incur debt when having to pay ordinary living expenses
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