by Chelsea Springli 
The unexpected can happen, and when it does, your finances may be impacted. As a credit union, we’re willing to work with you through these situations. Unfortunately, big banks and other financial institutions may not be. Take steps to protect your financial security and stay on your feet.
Start an Emergency Fund
According to the Federal Reserve, nearly 40% of Americans say they cannot cover a $400 emergency expense. If you feel the same or your reserves are lower than you’d like, now is the time to begin putting away a set amount each week, no matter how small. Or, consider using your tax refund as the down payment on an emergency savings account large enough to cover your essential expenses for a few months. Alltru has a great High Yield Online Savings account that makes for a perfect emergency savings account.
Creating a starter emergency fund and a fully funded one are two separate initiatives. We answered several questions about emergency funds in this blog.
Develop a Cost-Cutting Plan
It’s time to think about ways to cut costs. Prepare and prioritize a list of your expenses now so you can quickly cancel non-essential expenses, if needed. Here is a list of ideas to start:
- Music subscriptions
- Streaming services
- Gym membership
- Lawn care service
- Meal plan service
- Online news sites
These expenses are things you can cut quickly that will make a big impact. While convenient, your financial security is more important.
Make Sure You Have Credit Available
While you should be cautious about adding debt when finances are tight, it may be necessary to help bridge gaps between missing paychecks. A good rule of thumb is to only use about 30% of your available credit. If you exceed that amount, a new line of credit can help you maintain a high credit score and provide wiggle room for covering emergencies too. A Home Equity Line of Credit, for example, can provide a ready source of cash and increase your available credit.
Refinance Your Loans
Refinancing your mortgage, personal, or auto loans can help you save money over the life of your loan. Alltru members save hundreds (sometimes thousands!) each year by refinancing their loans to a lower rate. Alltru also frequently offers promotions to their members like skipping their auto loan payments for the first 90 days.
Refinancing a loan may require a hard credit pull, which can lower your score by a few points. Make sure you can absorb a temporary credit score dip before applying to refinance.
Refinancing is a great way free up extra cash by lowering your monthly payment. Here’s what you can do with the extra money to provide financial security:
- Pay off your credit card balance
- Save for your emergency fund
- Open a high-yield CD
Communicate with Your Credit Union
Open communication is one of the most powerful tools for protecting your financial security. If you anticipate difficulty making a payment or experience an unexpected change in your income or expenses, reach out to us right away. Our team of certified financial counselors can review your situation confidentially and explore options that may include flexible payment arrangements or other solutions tailored to your needs.
Circumstances can change quickly, and the sooner we know what’s happening, the more effectively we can support you. We’re committed to working with you, not against you, to help you stay on track and safeguard your long-term financial well-being.
