Where to Turn When You Need Financial Help
Need financial help after unexpected medical bills? You’re not alone.
Have you found yourself worrying about paying for unexpected medical bills, or some other expense that’s hit you out of the blue? You’re not alone—in the US, 47% of Americans can’t afford an unexpected $400 emergency and 62% of bankruptcies are due to medical expenses.
If you need financial help, you’ll sadly find plenty of companies eager to exploit your situation for their own gain. Predatory lenders, payday loans, credit card companies, and others are happy to offer you short-term solutions that will only worsen your situation.
To help you avoid those pitfalls and point yourself in the right direction, we’ve provided these tips and resources.
Six signs you might need financial help
The following are our six tell-tale signs that you probably need help with your finances. Are any of these true for you?
1. You don’t have any savings or an emergency fund
The primary way people avoid taking on new debts or loans, or otherwise getting into bad financial situations, is by building up savings and an emergency fund. Borrowing from your own emergency fund comes with no penalties or interest, and you set the terms of repayment. The general guideline is to save at least six months of expenses in an emergency fund. Read our tips for building a healthy emergency fund.
If you haven’t yet built up your fund, start now—even a little bit each month helps. No emergency savings? Learn how to use crowdfunding to get immediate help during a personal financial crisis.
2. You’re living off loans
Taking out loans to pay for everyday essentials—housing, food, transportation, healthcare—is a clear sign you’re living on the edge. Ideally, loans should only be sought in emergencies or to acquire an asset that appreciates in value (thus offsetting the cost of the loan).
3. You tap into savings for living expenses instead of emergencies
If you find yourself unable to grow your savings—or you routinely tap into savings just to make ends meet—it might be time to look closely at your expenses to make sure you’re living within your means.
3. You’re afraid to look at your ever-increasing credit card bill
Knowing you’ve fallen even deeper into debt is demoralizing, but it’s even worse when you ignore the situation. When you see the total on your statement continue to rise rather than go down, you need to move beyond denial and take action.
4. You don’t think twice about taking on more debt
If getting an additional credit card or payday loan doesn’t phase you in the slightest, you might have a serious problem. Debt is not to be taken lightly, especially when it comes with a high interest rate. A purchase you make today can end up costing tenfold down the line, and you can bet your lenders and creditors are counting on that.
5. You’re paying one debt with another
While consolidating your debts can be a good thing, “borrowing from Peter to pay Paul” is almost always a bad approach. Sure, a shell game might create the illusion that you’re paying off debt, but in reality, it puts you further from getting back to zero.
6. You’re unable to think about your future
If you find yourself unable to think about your future in a meaningful way, your financial situation has gotten the best of you. It’s time to take the “30,000-foot view” of your life and make the changes you need to make to recapture your optimism.
Bonus: six purchases you should never put on a credit card
While credit cards can offer a short-term fix, they worsen your long-term situation. At all costs, avoid paying for these six items with a credit card.
1. Medical bills
If your medical bills are manageable and can be paid off over time, talk to your doctor and hospital administrators about payment plans that have lower interest rates than credit cards. If the bill is so high it could force you into bankruptcy, maxing out your credit cards just to pay a portion of the bill is a bad idea and will unnecessarily complicate any eventual medical bankruptcy. For general advice on paying medical bills, see our posts How to Pay Medical Bills and How to Pay for Expensive Medical Treatments.
2. Mortgage payments
Since a mortgage is a debt, paying it off with another form of debt usually leads to more financial hardship. Many banks won’t let you use a credit card to make a mortgage payment. Taking a cash advance to pay the mortgage is strongly discouraged.
To pay the IRS with a credit card effectively raises your taxes and adds compound interest to them. The IRS will gladly set up a payment plan for you and charge you interest themselves. It’s not a great situation, but the IRS takes your ability to pay into account, and the terms and conditions are likely to be far better than those you’ll get from a credit card company.
4. College tuition
The rising cost of higher education has many looking for financial help, but credit cards are not the answer. Few individuals who put a semester’s worth of expenses on a credit card will be able to pay for it before compound interest starts piling up. Universities have their own assistance programs and financial aid offices with resources—though beware, as some colleges issue predatory loans. For in-depth tips and advice, see our posts How to Pay for College and How to Pay for Graduate School Without Loans.
5. Bills paid by mail
Providing credit card info through the mail can expose you to fraud. Fraud is less likely when you pay that bill online or over the phone.
6. Charitable donations
When you donate with a credit card without being able to pay off your balance, you’re actually donating the bank’s money, not your own. Since such donations incur interest, they could cost you considerably more in the end.
When you need financial help, crowdfunding is a solid option
More and more, people are turning to crowdfunding as a way to rally support in the face of an emergency or financial disaster. People have used GoFundMe to raise more than $5 billion. Our site is for fundraisers, which means you get to keep more of the funds you raise. We also offer a wealth of resources to help you make the most of your efforts. Check out our blog for recent news, tips, and ideas. If you haven’t already, launch a fundraiser, begin your climb out of debt, and start saving for the future you deserve.