Preparing for Financial Emergencies
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Preparing for Financial Emergencies - Money Problems Radio Show |
| Originally aired on November 19, 2005. | |
Show Topic:
At the end of 2004 we all watched the tragic story of the Tsunami. In 2005 we watched the tragic stories of the Hurricanes in the United States that destroyed thousands of homes, and left tens of thousands of people without homes and jobs.
But financial emergencies are not always the result of natural disasters: losing your job or having a medical problem that makes you unable to work can also lead to financial emergencies.
Ask yourself this question: If you were to lose your job today, how many paycheques would you have to miss before you and your family were in serious financial trouble?
On today's show we discuss what causes financial emergencies, and what you can do to prepare for them.
Guests:
Douglas Hoyes and Ted Michalos are the founders of Hoyes, Michalos & Associates Inc, one of Ontario's leading personal insolvency firms. They emphasize a "fresh start" when dealing with money problems. They can be reached at www.hoyes.com or, in Ontario, at 310-PLAN (no area code required).
Show Summary:
There are many causes of financial emergencies, including:
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Unexpected job loss |
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Marriage separation or divorce |
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Medical problems |
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Natural disasters |
Some emergencies creep up on you, like having your hours gradually cut back at work. It's like a dental emergency: you might get a tooth chipped playing hockey, or you might get a cavity that develops slowly over time; either way, it can cause an emergency that needs to be treated.
Our guests provided some tips on how to avoid financial emergencies:
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Save money |
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Don’t buy on credit if you can’t afford to repay it |
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Always plan for the worst case: |
| - Have your resume ready in case you lose your job; - Have medical insurance to cover medical problems. |
Question of the Week:
Q. We got married, bought a house, and everything was going great. We had mortgage and car payments, and a line of credit, but we were able to make the payments. Then, while I was off on maternity leave, my husband lost his job, and we had to use our credit cards to survive. He’s found a new job, but it doesn’t pay as much as the old one, and we are way behind on our bills. What can we do?
A. This question illustrates a very common financial emergency. Everything was going great, and then something happened (in this case maternity leave and job loss). When you have financial problems, we recommend you follow our five step plan for dealing with your financial problems:
| 1. | Work out a plan debt repayment plan on your own to repay the debts by cutting your expenses and increasing your income. |
| 2. | Get a debt consolidation loan. For example, if you own a home, you may be able to get a second mortgage and use that money, at a lower interest rate, to repay your higher interest rate credit cards and other debts. |
| 3. | File a Debt Management Plan. These plans are filed by non-profit credit counsellors; you pay your debts in full over a two to five year period, and the creditors agree to waive any further interest owing. |
| 4. | File a consumer proposal; this is a great way to negotiate a settlement with your creditors, and in most cases you end up paying less than the full amount owing. |
| 5. | If no other option works, bankruptcy is the final option. |
Don't let your Money Problems overwhelm you; contact a bankruptcy expert today for more information about preparing for financial emergencies as well as dealing with problems caused by them.
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