A sudden reduction in family income can be traumatic. Many Louisiana citizens are experiencing this strain due to displacement caused by Hurricane Katrina. Reduce this hardship by taking positive action.
Examine Family Resources
Determine your current financial position by identifying income and other assets that can easily be converted to cash
Identify skills and resources that can be used to cut costs, earn money, or be traded for essential goods and services
You may need to use emergency savings or take out a loan
Consider applying for disaster assistance from FEMA (1-800-621-FEMA or www.fema.gov) or Emergency Food Stamps
Control Spending
Identify critical needs (food, shelter, essential clothing)
Develop a realistic, flexible family spending plan
Separate expenses into fixed and flexible categories. Give higher priority to fixed expenses including: mortgage payments, rent, installment credit and medical and life insurance premiums
Flexible expenses such as food, utilities, clothing, recreation and household expenses can be more easily adjusted
Agree to discuss purchases over a certain amount with other family members before purchasing
Make a shopping list and stick to it
Comparison shop
Buy specials
Use coupons
Shop at discount and dollar stores
Seek cash discounts
Substitute lower priced items
Avoid purchasing on credit
Use community resources
Maintain insurance coverage. Ill-effects of stress may increase your need for health care.
Do not postpone essential medical and dental care. Such action may prove costly in the long run. Health care professionals may be willing to negotiate a payment schedule if you ask in advance.
Maintain Debt Payments
Don’t neglect regular payments on consumer debt. Your largest and most important payment is likely your mortgage. If it is unmanageable, contact your lender immediately to negotiate a repayment plan. If possible, schedule an appointment and talk personally to the person in charge.
Contact other lenders to propose repayment plans.
Another solution may be to refinance a loan, contracting for smaller payments over a longer time.
Avoid high cost alternative lending institutions
Bankruptcy should be considered only as a last resort. It remains on your credit history for 10 years and jeopardizes your credit score.
Set payment priorities
If you can pay some debt but not all; pay those bills that:
Maintain vital services (utilities, phone, transportation, insurance)
Have the highest interest rate
Cost the most to postpone (late penalty, repossession or disconnect/reconnect charges)
May be aggressively collected
Control Stress
Be extra patient with yourself and others
Share your grief with a caring friend, family member or minister
Don’t expect things to immediately return to normal
Eat nourishing foods, rest, and get relaxation when possible.
Focus on the big picture rather than the small details
Provide help to others when possible. It will make both of you feel better.
Think positive
Avoid the tendency to resort to bad habits.