The Ultimate Survival Guide For A Personal Financial Crisis

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For years my husband and I predicted a financial crisis starting in 2019 that'd become really evident in 2020 through 2021. We started to think ahead about how to financially plan for a financial crisis. We wanted to ensure we'd be able to not only survive it, but overcome it with ease.

And while I don't think either of us could've predicted the global pandemic or circumstances that have since unfolded in 2020, I am happy to say by taking the time to prepare for a financial crisis, surviving it so far has felt way less overwhelming. I'm going to share all our secrets with you today, including the money moves you can make while in a financial crisis.

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A quick note on the current global finance crisis…

Since this year has started, I've watched friends lose their jobs, terminate their leases and move away from beloved cities. I've witnessed so many worry about how they'll pay their mortgage and care for their children.

The financial crisis in our country has hit millions of people, and I believe we haven't even seen the worst of it. Afterall, we only reached official “recession” status a few months ago, and while it's not the worst financial crisis (that's considered the Great Depression), it definitely seems to be the most unusual.

Lexington Law put together an entire resource page for what's currently happening in 2020! Covering everything from unemployment to mortgage relief to student loan relief, to financial emergencies and more. Check it all out here.

If you haven't been impacted by the financial crisis yet, congratulations! With that said, things are still very unknown and then there's the recovery period. So this is likely not over, no matter how fast the recovery ends up being.

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Even though my husband and I are both entrepreneurs, surviving a financial crisis in business is a whole other topic and I'd suggest reading this post on coronavirus relief options for businesses.

So today I wanted to share a survival guide for how to overcome a financial crisis focusing solely on our personal finances.

I'll share ways we prepared for it, thoughts on how to prevent it, and solutions to not only survive a personal financial crisis, but thrive.

But first…

What is financial planning?

Financial planning is basically a long term planning method that looks at your current financial situation and puts strategic steps in place to reach your financial goals, while accounting (to the best of its ability) for obstacles that will inevitably come up.

Financial planning is a major key in surviving a money crisis. It's the first step we took in preparing ourselves for the next financial crisis. We identified our money goals and figured out how to stay on track with our financial goals during a financial crisis.

How to prepare for financial crisis

The phrase, “the best defense is a strong offense,” applies to your money during a crisis.

In other words, one of the best ways you can prepare for a financial crisis is by doing regular maintenance and check-ins on your personal financial situation as part of your financial planning.

By regularly checking in with your money, you are cultivating financial discipline, which makes it easier to stay on track with your money goals.

Furthermore, if any errors, issues, or out of the ordinary trends come up, you can catch and correct them right away.

How to survive a financial crisis:

1) Understand your financial situation

If you've been doing regular maintenance this will be pretty easy. If you haven't been, start by checking in on all of your accounts.

See how much money you have in them, what payments/bills/transfers are automatically recurring, and if you're carrying any debt, what is happening with it.

Now is a good time to pause, or reduce, automatic contributions to retirement or investments in order to get at least a year's worth of liquid cash in an emergency fund.

2) Create a financial crisis budget

With a financial crisis comes reduced spending. We have to stretch your dollar as far as it'll go right now!

3) Check your accounts weekly (if not daily)

Start getting into the habit of checking your accounts every week, if not daily. This can add a layer of accountability to your spending and make it easier to stay on track with your financial crisis budget.

It's also a good habit to be in to ensure no wrongful charges are coming in. Scammers tend to come out in full force during hard financial times like this. Read more about some common scams to look out for during stressful times written by Lexington Law here.

4) Re-evaluate debt

Depending on your situation, there are a few options here:

First, call your lenders and negotiate better terms. See if they can meet lower interest rates, a lower monthly minimum, or (depending on the debt) see if they offer any sort of forbearance (e.g. a temporary postponement of payments on student loans or your mortgage).

Second, consider restructuring your debt repayment strategy.

See which debts you can put in forbearance without them costing you anything ideally. Prioritize paying your most expensive debts too (think interest rates in the double digits).

Lastly, and again, I want to stress this is all a case-by-case situation: If you don't have a liquid emergency fund to cover at least 6 months (hopefully a year), maybe consider reducing debt payments to just the minimums and focusing on your emergency fund first.

The rationale here is simple: you don't want to keep aggressively paying off debts only to find yourself needing to take out more debt in a few months when the financial crisis catches up to you.

By reducing your debt repayment to a more modest strategy, and putting your aggressive savings towards a liquid emergency fund, you can prevent defaulting on your loans, while giving yourself a preventative cushion from having to take more debt out in case of an emergency.

Lastly, I want to point out something Lexington Law talks about in this article (<— go read that!!) about banks loosening lending standards. While this is good news, especially during times of crisis when we may need to rely on loans, be wary of predatory lending.

Learn more about predatory lending and banks loosening standards and what it all means for you here.

5) Take care of the 4 walls

The “4 Walls” is a term coined by Dave Ramsey that basically means taking care of your: housing, transportation, food, and clothing.

I put it here since it's easy to remember, but personally think it maybe needs to be updated to “take care of the hut” which would include home, transportation, and food.

Essentially though, it's about making sure you are prioritizing your safety and security.

Ideally you'll have a secure shelter, food, and a way to get around. These can make generating an income easier, which ultimately helps you survive a financial crisis.

I want to stress that this will look different for everyone.

For some, housing may mean paying their mortgage, for others, it could mean staying with friends or family or in their car. Whatever that looks like for you is okay during this time, we just want to make sure you're taken care of.

For instance if you're staying in your car, try to come up with somewhere you can park it overnight that feels secure and you're less likely to be asked to move.

Some suggestions from friends who have been there over the years: a friends driveway, a camp grounds, a residential parking garage with guest spots.

Create a ritual for how you'll take care of your hygiene like a favorite outdoor shower or stream.

If you're staying with friends or family…

Ask what you can do to ease their burden. I recently was talking to a friend who had two people staying with her at the start of the pandemic. They weren't contributing to rent and only gave $20 a month in utilities. Then one day one of the guests used a whole stick of butter… and she asked him to replace it when he went to the grocery store.

His response? “Well I only ate 25% of the entire container, so how much was the butter and I'll Venmo you for 25% of the price you paid.” UHHH?!?!

Yeah, don't do that.

Instead, ask how you can contribute to make this easy on everyone and ensure you have some security in your living situation. If you can't contribute monetarily, maybe it's doing housework.

6) Repair your credit score

Bad credit can cost you big time in higher interest rates, premiums, and even prevent you from getting a good deal on housing or a job in some cases! Read all the ways bad credit can impact you here.

While your goal right now is obviously to stack an emergency fund and take care of the 4 Walls, it's also a good idea to receive your FREE credit repair consultation from the professionals at Lexington Law here.

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Having an understanding about what is happening with your credit can help you in removing unfair, inaccurate, or unsubstantiated negative items on your credit profile that could be costing you. This could be an important step if you were unsuccessful in negotiating those lower interest rates we talked about earlier.

7) Sell things you don't need (and even stuff you may need)

After I got fired twice in a month, I took about six months off to live the South Florida retired life before starting my own business.

During that time, I lived off my emergency fund and I sold a lot of my stuff on sites like eBay and Swappa. Old phones, purses, shoes, jewelry, and more! I was able to make a few thousand dollars doing this and it was relatively easy.

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If you're really strapped for cash, you could sell things you do need too, and then just use a portion of the sales money to buy a cheaper alternative.

E.g. Maybe you have an iPhone 11 you could sell for $750+ and then buy an iPhone 8 for $200 instead, coming out a few hundred dollars ahead.

8) Side hustle

A side hustle is something you do on the side of your main source of income to generate more money.

Many people do things like blogging, selling things, and coaching. You can find more ideas for passive income and side hustles from my friends at Lexington Law here.

9) Go through the stages of grief

A financial crisis is a crisis. period.

And a crisis comes with a lot of emotions, particularly grieving what once was or could've been.

Whether it's having to terminate your lease and leave behind a beloved city, or maybe realizing you won't be able to retire early anymore. There is an element of grief that comes when our plans are derailed.

This is important to acknowledge since spending has an emotional tie.

Think about it, what do you do when you feel sad? Anxious? Depressed? Order new clothes? Order take out? Go out with friends? Book a quick trip? Order new throw pillows? (…okay, just me on that last one?)

Either way you get it. We tend to reach for outside things (that cost money) when we are feeling down. Even if it's just ordering Chinese food.

Take the time to go through the 5 stages of grief. Get it out of your system, so you don't derail your financial situation further:

  • Denial. I like to keep a running note in my phone or have a person I can vent to that just witnesses the denial with me. Basically, I just acknowledge all of the statements and thoughts going through my mind that are holding me back from seeing the situation clearly here. Then I challenge them. I lovingly interrogate them to reveal the truth: that this is in fact happening.
  • Anger. This naturally comes up when I'm doing my denial process. I get angry. Angry about what was “supposed” to happen. Angry about what “could've” been. Again, I like to write this down or express it in front of a safe person who can just witness the feelings coming up with me. So I know they are real and valid.
  • Bargaining. I've never been a big bargainer, but it'll creep in here and there. Same process as above.
  • Depression. Inevitably, the “hopelessness” factor starts to sink in. During this time I tend to get a little defiant. I'll order the take out, plan a day trip, and sort of go through a second wave of denial only for it to not work and then I'll let the depression in and just watch TV, hang out in bed, and pray for a thunderstorm to cleanse it all away and lead me too…
  • Acceptance. I shared this on IG a few weeks ago. A quote on acceptance + breaking down the timeline of this year for us and how it's been one crisis after another. The thing is, looking at all of that was sort of like the final thread of the acceptance quilt I'd been knitting through all of the steps above. I didn't feel sad, or angry when I looked at it all. I felt proud of how we've processed the turbulent time. Looking at each thing we not only survived, but thrived with, reminded me that we are still here, safe, and okay.

Simple solution for financial crisis:

Win the lottery

…I'm kidding.

Truthfully, there is no quick fix to a financial crisis.

So the only simple solution I can offer you is this: while it's important to acknowledge how difficult this time is for you, it's equally as important to acknowledge there is always someone struggling more than you.

Don't get caught up in a pity party that only makes it harder on yourself.

How do I survive the next financial crisis?

Lexington Law put together a helpful guide on how to prepare yourself for the next recession you can read here!

I think step one to surviving any financial crisis is having a clear vision on what your financial goals are and what financial discipline is to you.

Obviously every financial situation is different. It's unfathomable to me that people buy new clothes every month, and I'm sure I seem “frivolous” with my money to some people as I get an at home massage. Neither is right or wrong.

Here's what I can say: there is no shame in living paycheck to paycheck.

However, if that is your situation, it's important for you to remember there is no shame in that.

Ask for help, take advantage of resources available to you like the ones outlined here from Lexington Law, and become forward thinking. There will be a day this is no longer your reality.

A common phrase I heard growing up was…

“You can always make more money.”

And that's one of my money mantras while going through a financial crisis.

I can always make more money. I can't get my time back. So find ways to feel gratitude, bring in more community, and survive this time in a way that makes sense for you.

How to prevent financial crisis

Preparation is key to surviving a financial crisis, but what if we can prevent one from happening in our bank account?

That's exactly what my husband and I set out to do once we got this feeling about the impending 2020 recession a few years ago.

We decided to get strict with our money and put some guidelines in place to keep us financially disciplined. The plan here was simple: get clear on our financial goals so we can stay on track with them no matter what the global financial crisis was doing.

My husband and I both self employed entrepreneurs for the better part of a decade now, so we're pretty accustomed to unusual cash flow, highs and lows, and having to cut our expenses to the bone.

One thing we did was get about just over a year's worth of living expenses into an emergency fund. Meaning if we didn't make a single dollar for an entire year, we'd still be able to pay our bills and the moment we needed to start touching that money, we knew what things we could cut from our budget to stretch that even further if needed.

This obviously doesn't take the national financial crisis away, but it prevents it from impacting us personally.

With that said, of course there are still financial anxiety and worries that come up. We are human and when one revenue stream dries up for me or when promised money doesn't come in for him, it hurts.

Our hopes are deflated and fear can creep in. But I always go and look at our savings account at that point, take a deep breath, and find gratitude for the reality of our financial situation: we are okay because we prepared for this.

A note on balance:

My husband and I believe in indulging. We believe in living as if we are retired today. It's why I hate the FIRE movement… the idea of cutting back and working hard for years feels frustrating to me.

What if we got sick or passed away and never got to enjoy that next part of our lives? Similarly, what if our financial lives were flipped upside down?

I always want to be able to look back and say we enjoyed ourselves while taking care of our future selves to the best of our ability. Not that we deprived ourselves only to still end up feeling “behind” or like a “failure.”

So when it comes to preparing and preventing a financial crisis in your personal life that's the best advice I can give you: find your own balance for security and enjoyment. Your financial situation is unique. It's important to not live in denial or fear.

How do you prepare and survive a financial crisis impacting you personally?

I'd love to hear in the comments!

And don't forget to click here and get your FREE credit report consultation from Lexington Law today!


How to survive a personal financial crisis on a global level from someone who recover from 2007 2008 + focused on how to prepare for getting out of the 2020 recession. This world crisis is unlike any other, but these steps have proven to work for my family of 3 surviving on one income. Make these money habits part of your lifestyle to optimize your financial health in my Ultimate Survival Guide For A Personal Financial Crisis, #financialcrisis #personalfinance #financetips