How To Handle A Personal Cash Flow Crisis

by on September 8, 2016

A cash flow problem is a financial problem when you run out of money before the end of the month. It happens to small businesses, who find that they can’t meet their overheads and it happens to individuals whose paycheck, pension checks, or social security check runs out before they have paid all their bills.

This cash-flow problem can be due to either an emergency or to poor budgeting. With that in mind, let’s look at some ways to get immediate income and ways to end recurring cash flow problems.

Temporary Cash Flow Problems

If you find yourself short of a small amount necessary to pay your bills after spending your money to meet an unexpected emergency like your car breaking down in the middle of the freeway, then here are five ideas to consider:

1. Take out a personal loan or installment loan. A business like BlueTrustLoans can deposit as much as $1,250 into your bank account quickly. Alternative lenders only require you to meet a modest list of requirements before they put the money into your bank account, and this can happen as soon as the next business day. The size of your loan depends on your ability to pay back the money. The basic requirements are that you are a US citizen, are over the age of 18, have a verifiable source of income, and have an open checking account with a bank or credit union. After filling out an online application, a customer service representative will verify all your financial information. After approval, you simply eSign a loan document.

2. Borrowing from family or friends. While this may be an obvious solution, it can be difficult at times to get anywhere with it. You might be too embarrassed to ask, your family and friends may not have the money or may not believe you will return it, or you may be living too far away from people who can help you. While the first two problems are difficult, requiring courage or good luck to solve, the third is easy to resolve. Using Western Union, you can receive the money you need fast.

3. Negotiate with creditors. Call your creditors and explain your situation. You may be able to make a partial payment or postpone payment until your money comes in.

4. Open up a credit card. If you have excellent credit, you might be able to get approved for a credit card. You can then use your line of credit to take care of your expenses and then pay off the credit card when you get income.

5. Get a temporary job. You may be able to get temporary work to help you earn the money you need. For instance, you might be able to provide a delivery service, moving help, local handyman service, or home cleaning. You can get paid immediately after you do the work. Websites like Craig’s List and Task Rabbit can help you find these gigs. If you are a specialist in something, you can do a small project for someone.

Recurring Cash Flow Problems

When you have recurring cash flow problems every month or every few months, then your expenses exceed your income.

Assuming that you can’t get a job or a better paying job for one reason or another, here are 4 ways to manage your expenses better.

1. Create a budget. Often when we overspend, it’s because we don’t realize it at the time. We haven’t balanced out our checkbook, looked at our credit card statements, or created a budget to balance our inflow with our outflow. A budget allows you to review how you’ve been spending money and notice the few things that you can cut out. You will find ways to cut out surplus purchases or buy cheaper products.

2. Get more disciplined with using your credit cards. While credit cards can allow you to initially meet cash flow problems, there comes a point where you are over your head. Limit your use of credit cards to keep your scores high. Ideally use them for emergencies only. Don’t use it to get instant gratification and try to find alternative ways to close the gap between income and cost of living.

3. Cut back on your lifestyle. Choosing a minimalistic lifestyle might help you balance your budget. For instance, the cost of monthly car payments, paying high insurance, and covering gas and repair bills might be making a big dent in your budget. If you live in a city, you might be able to use public transportation to completely remove the costs of owning an automobile.

4. Find ways of increasing your income. This is the best possible solution. Even if you are successful in creating a good budget, using your credit cards wisely, and reducing your lifestyle expenses, you are still living in an economy where the cost of living is steadily going up. There are many ways of increasing your income that don’t require you to get a job. For instance, you could create an online business buying and selling on eBay or selling at flea markets. By researching the possibilities online as well as talking to people who earn a living from some kind of freelance business, you might find a way to earn a living without having to qualify for a regular job.

Cash flow problems are upsetting, but by taking proactive measures when they are temporary and managing your money better if they are recurring, you can quickly put them behind you.

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