Financial Bounce Back: How to Recover From 5 Life Emergencies

Posted

how to bounce back money disaster Life is all about change. Some changes you plan for and welcome with open arms. Others find you, whether you’re ready or not—with an emphasis on the not.

Whether it’s the nuisance of a flooded basement or the devastation of a death in the family, it’s hard to be 100% prepared—both emotionally and financially—for some of life’s unexpected events.

The one bit of good news is that more of us, thanks in part to lessons learned from the economy, are saving better. According to a recent Chase Blueprint®/Aite Group survey, about 40% of people are saving more now than they did during the recession by finding ways to cut spending.

The bad news, however, is that there’s still room for improvement: More than half of Americans don’t have enough emergency savings to cover three months’ of expenses, according to the FINRA National Financial Capability Study.

This is all the more reason why it’s critical to know what to do—and what not to do—right after a disaster. Mistakes you make when you’re in transition and vulnerable can have ramifications for years, and smart moves at a time of crisis go a long way toward mitigating the mess and helping you move forward.

So before an unfortunate event strikes, school yourself on these invaluable first steps to take if you’re ever confronted with one of these five financial emergencies.

Life Emergency #1: Divorce

When a marriage is being dissolved, you may be mending a broken heart, but you’ll also have to deal with broken finances—especially if money is a big part of why you’re getting divorced in the first place.

As angry as you may be, now is actually a key time to collaborate, says Julie Murphy Casserly, a Certified Financial Planner™ and president of JMC Wealth Management. The reason is simple: digging in your heels and fighting relentlessly about everything could cost you a lot of money and undue stress.

So you may have to decide which assets are actually worth fighting for. The big house, for example, might be too much of a financial burden when you’re on your own. So in addition to hiring your own lawyer, says Murphy Casserly, consider working with a mediator who can help keep things on track.

RELATED: 10 Things You Need to Do When You Get Divorced

  • Elisha

    I have a problem with ” the last thing you should do when you’re unemployed is overuse your credit cards or deplete your savings.” I don’t think anyone chooses to do this, but just because you lose your job doesn’t mean the bills stop coming. I once lost my jobs and had to wait 6 weeks before I started receiving unemployment. You can’t always avoid using the credit cards or depleting your savings. This was obviously written by someone who has never been unemployed.

    • Jackie

      Or written by someone who really wants to stress the importance of having an emergency savings.

  • Rachel F

    Well, this is in fact decent advise. I must point out 1 particular thing that helped us ( and this will not encompass all people in the same situation). We had 1 paid off small credit card that we kept after our bankruptcy ( it was not included). The amount of time a credit line has been open, makes a HUGE impact on how quickly you recover from a bankruptcy. We both had our original “small amount” credit cards ( say $300-$500) that we always just had….. we kept those and ended up recovering at a much quicker rate, as this left us with a positive credit history from a longer period of time. Just a little FYI, if there’s no debt on it, you should keep it!

  • Cathy Baumgardner

    You recommend that when your spouse dies that you hire a financial planner. Not everyone has the money to do this. Please recommend things for people who do not have extra money when things happen.