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Budgeting During a Crisis

A piggy bank floating on a life ring buoy in the middle of a flood.

Keep these practical steps in mind to maintain your financial well-being, even during challenging times.

Enduring the recent wildfires in Los Angeles has tested the resilience of many, impacting emotional well-being and altering living and financial circumstances profoundly. Below are some practical steps to help you sustain financial stability during and after this emergency situation.

Assess Your Financial Situation

Start by reviewing your income and expenses. Understand what funds you have coming in and where your money is going. Keep a record or utilize online tools to track your spending across different categories, making it easier to identify where adjustments can be made.

Adjust Your Expenses

When your income does not cover expenses, especially during a crisis, it’s crucial to prioritize. Make sure that your budget focuses on essentials: housing, food, and whatever else you need to remain safe and healthy. Look for areas in your spending where you can cut back, like dining out or streaming services.

Consider Your Savings and Autopay Options

In tough times, it might be necessary to reduce the amount you save, especially if it helps you to stay afloat. If you are used to automatic bill payments, reconsider this approach. Managing your payments manually during a crisis can help avoid overdraft fees, giving you more control over when and how much you pay.

Communicate with Lenders and Creditors

Should you find yourself unable to meet your financial obligations, reach out to your lenders or creditors before the situation escalates. Many are willing to offer support, whether it’s through deferred payments, alternate payment plans, or other forms of assistance.

Use Credit Wisely

Credit cards can be a temporary solution for managing cash flow during a crisis. However, be cautious. Use credit for necessities and aim to clear the balance as soon as possible to avoid accruing high interest.

Seek Assistance

If the financial impact of the wildfire is too significant, remember that assistance may be available. From housing support to debt relief options, don’t hesitate to explore the resources that could ease your burden.

Avoid Quick Fixes with Long-Term Consequences

Be cautious of solutions like payday loans, which might seem helpful but can quickly lead to a cycle of debt due to high interest rates. Consider alternatives like personal loans or credit counseling from trusted agencies.

Wildfires can cause immense emotional and financial distress. However, by taking deliberate and informed steps to manage your budget, you can navigate through this challenging time. Prioritize your spending, seek assistance where needed, and communicate openly with those you owe. Remember, it’s about making the best decisions for your present and future financial wellbeing.