What to Do When Your Finances Fall Apart

Sometimes life throws us a few curveballs and we just are not prepared.  All financial obligations should be paid and I don’t advocate missing any payments, but sometimes priorities must be made because of an emergency situation.  Ideally, of course, everyone would have an emergency fund just for these types of situations.  The reality is 47% of Americans cannot pull together an extra $400 cash if it were needed.

What should you do if you don’t have enough money to pay for all your bills?


First you will need to prioritize your spending.  You will need to take steps to protect your income, shelter, assets, and well-being.  Which means if you need your car to get to work and it has a loan on it, the loan should be paid, as well as the insurance.  Also, make sure there are funds for gas.  If any trips need to be taken to the grocery store or to run errands, consolidate those trips to conserve fuel.  

Make your rent or mortgage payment. Pay your utilities.  Make sure your insurance:auto, rent/homeowners, dental, etc. are paid up, and that there is money to feed your family.  Not for restaurants, groceries. Remember, this is about an emergency moment in time.  Everything else will need to wait.  

If there are funds left after priorities are paid, then loans secured by property should be paid, such as a second car.  Next, pay your unsecured loans and consumer debt such as credit cards. But understand, given the nature of military work, financial trouble can cause work trouble and may subject the military member to closer scrutiny or loss of clearance if they are deemed a risk.   


Determine how long the situation will last and what you can do to improve it as soon as possible.  Draw up a plan or reach out to your installation Financial Readiness Coordinator for assistance on how you can strengthen your financial position.  Explore service member financial assistance programs that may be able to help, such as the Army Emergency Relief Fund.  See how much you can pay towards your other outstanding obligations and when.


Reach out to your lenders and clearly and firmly communicate your situation. Most military installations have a Financial Readiness Coordinator that can assist you with writing a script or a letter to outline your plan to pay off your obligation or how you will be able to get on track.  Military One Source has a tool to help you look up the Personal Financial Management Services Program nearest you.


Stay true to your word and follow the plan. Keep the lines of communication open and continue to pay your obligations as agreed.  If your situation improves, update your plan to reflect the new reality.  
Do you have a plan if life throws you a curveball? Do you have an emergency fund?