Dancing Around A Financial Crisis

About a year and a half ago I did a full remodel on my house. While it simply started with a cracked shower pan, it quickly turned in to new tiling, paint, carpeting in the bedrooms, knocking down some walls, putting up others, kitchen countertops, backsplash, and lastly new furniture. Yes, the remodel bug bit, and it bit hard. And while I absolutely love how everything turned out, it wasn’t the smooth sailing journey I had hoped for.

You see, after I tiled the living room areas it looked so amazing I decided to keep going into the kitchen and pantry areas. This is where things got a little interesting. As the workers were cutting into the baseboard where my washer and dryer are housed, they hit a line. The hot water line. As water came spewing out like a fire hydrant, the immediate need was to shut it completely off. 

This normally wouldn’t have been an issue, seeing as Gerhard (my late husband) had just about every tool ever made in the entire world, to include the big key "thingy" for the water main. However, with most of my furniture piled into the garage the height of Mt. Everest, getting to that particular area, and finding it, was an issue. So I did what any sane and partially rational person in this situation would, and ran out the front door to high tail it to my neighbor’s house.

As I exited onto the front porch, it dawned on me that the three inch snow covered ground and my flip flops weren’t the best match, but there was no time to reconsider my fashion choice. I needed the KEY. I frantically ran across the street, skidding meticulously like a cross country skier attempting to grab the gold (key that is). After clumsily falling twice, I finally made my way to the front door and began pounding. As my neighbor handed over the key, I began my trek back across the street, frozen toed, cold, and wet to save the day. However, there was one more little obstacle standing in my way…the location of the water main! Since I don’t think I have ever mowed the yard in my entire life (and for that matter don’t plan on starting), I wasn’t sure where the cover was. Neither did the three guys laying the tile.

Since water was still gushing out, now pooling in my garage, we made a game plan to have one of the guys stay back and continue to sweep it out until we could shut it off. Yes, my mountain of furniture was in dire jeopardy at this point. The two other guys, Keith, and I decided to clear the snow from the front yard by doing a technique I like to refer to as the penguin on crack cocaine dance… You start with your head down staring at the ground, heels together, toes pointed outwards, and move each foot forward one at a time as quickly as possible, while still keeping your heels pointed inwards, to clear the maximum amount of area in the shortest amount of time. After clearing almost the entire yard, it wasn’t until we made our way to the little strip of land between the street and sidewalk did we find what we were looking for. We turned the water off, called a plumber to fix the damage, and all was well. (Since I haven’t seen this video on YouTube just yet, I am confident the slow moving vehicles coming down the street were simply being cautious due to the icy roads, and we were NOT hindering them in any way with our dance).

How does this relate to financial planning? Pretty simple actually… You see, acting quickly in the face of adversity is the key to limiting the potential negative effect it can produce.

Let’s take, for example, being laid off work for a period of time. Let’s face it, even though you may be able to claim unemployment, it mostly likely won’t be the amount you’re used to bringing home. If it’s a short period of time, like a month or so, and you are given a chance to plan for it, you can contact your financial institutions to make arrangements for any payments you owe.

Let’s look at a vehicle loan for example… Most institutions are willing to work with you if you’re upfront with them, are current on your payments, and don’t consistently make your payments late. They simply have you sign a form (some do not even require this) to tack the payment to the end of the loan. This means you can skip the payment one month, and add an additional month to the end of the loan period. So instead of paying your car off in 60 months, it will be 61 months (but still only 60 payments, plus any accrued interest during the month “break” you were given).

Credit cards can work a little differently. Often times they will arrange for you to make a double payment the next month, while waiving the late fee. However, if you make late payments frequently, they may not provide you this option.

Concerned about a mortgage or rent payment? That’s even a little trickier. Postponing a mortgage/rent payment is not typical for a financial institution or landlord, and late fees are frequently not waived. Asking never hurts though… If delaying payment isn’t an option, you can possibly offset this by making a call to your various utility companies. Often times they have lower late payment fees than most of your creditors, and may allow you to make a partial payment without leaving you in the dark.

Taxes. ‘Nuf said… Before you find yourself in another bind come April 15^th, make sure to either have taxes taken out of your unemployment check, or stash back enough to cover what you may owe. IRS penalties are brutal, and while your electric company doesn’t have the authority to garnish your wages, the IRS can levy a tax lien against you.

Still unable to meet your obligations? As a last measure, if you participate in a 401k through your employer you may be able to take a loan. Ask your account administrator (usually the Human Resource Department) about your options.

Making contact with your creditors and explaining your situation as soon as possible is always a good idea. In most of these cases, asking for forgiveness instead of permission will only leave you out in the cold frantically looking for a solution. I assure you, you probably won’t be dancing.

"Image courtesy By By iosphere, published on 31 May 2014 Stock Image - image ID: 100263377  FreeDigitalPhotos.net"