Financial decision-making steps some may take as a last resort

KNOW YOUR OPTIONS FIRST

Financial decision-making based on situational circumstances sometimes force people to take steps in their lives that they’d rather not face.

I’ve never hit rock bottom or near that state financially myself but I do have close friends who have and it’s not a fun place to be in.

They may not be the best decisions to make at the time but you might feel you have no choice.

The problem with this is when you feel you have nowhere left to turn sometimes the decision-making could come back to haunt you.

First off, panic is not the solution when you run out of money or your bank account is nearly $0 but you should never let your finances get to the point where you have nothing in the bank.

I know decision-making may bring uncertainty and things happen but the lesson you might learn should pave the way for your financial future. We learn from our experiences in life or at least we hope we do.

Procrastinating is not going to put money in your bank either and if you are faced with financial challenges then you must make the best of what you’ve got.

I know people who are living with just what they need and not want just so they can save a few dollars in the bank. That to me is smart decision-making because they know that they have to make changes.

If in your decision-making process you realize you can do without some extras that might mean no internet, no cell phones etc. then you have to do it. Nothing in life is easy and no one will sympathize with you unless you take control first. We don’t need technology the way people believe they do.

Even though times have changed and some say we should keep up with the world there are alternatives especially if you can’t live without the internet. We are just conditioned to believe we do especially for those who grew up surrounded by it.

In my years I had no cell phone, no internet, no technology, it was called family time outdoors. Sure we had a TV but we spent more time exploring the country as a family then we did in front of the box.

Tough choices

A friend of ours just recently split up with her husband. They have one child together and were married for many years which meant they have lots of stuff.

Part of the financial decision-making was figuring out what to do first. They had to sell the house they were living in and our friend had to make some drastic changes in her life so she could move on mentally and financially.

Her ex-husband is not giving her much in the way of child support but that may change in the future once she goes to court. In the meantime she’s had decision-making to do which meant she removed non-essentials from their lives. She was a stay at home mom for the entire time after their daughter was born so she’s been out of the workforce for many years.

She managed to go back to her ex-employer to see if they were hiring. As luck would have it they were so she was back working full-time just because she utilized the power of leaving an employer on good terms.

Now you know why it’s not smart to tell your employer where to stick it or leave your employer without proper notice because you never know what life changes might come your way and who you might need to rely on.

Last resort financial decision-making

Last week I talked about how to make money fast without going crazy but this week I wanted to talk about other ways people find money that might not always be the ideal way but they feel they have no choice.

All of my points below are relative to certain situations and are not meant to say that just because you run out of money you will do such a thing but there are people who do.

I wanted to break it down so people see how some people can get desperate for money when there is simply nothing left and decision-making means making tough calls.

There are always pros and cons to each decision-making process when deciding what to do with our lives. Pride gets in the way of many people so instead of asking for help they take alternate routes which could land them in hot water with the authorities.

Dating and finance

I’m a guy and I know that many men pride themselves on being the bread-winner and in some cases feel pressured to have a career that makes a good income otherwise they are frowned upon.

In our heads we know that there aren’t many women interested in a man who is broke or smothered in debt he can’t pay back and likely never will.

I know it sounds like a horrible way to think but it’s true. It’s getting hard to make ends meet for so many people and it’s not long after when dating someone where they might ask about your financial situation.

I don’t think that it’s wrong of them either because why should someone walk into a financial situation that might change their life forever? They need to know.

Some potential love candidates may run and some may stay but if they aren’t on the same page financially things will get rough in the relationship no matter how much love there is. There has to be a common ground financially, emotionally and physically.

My wife says it’s no different for women who want a career but struggle to find a job or end up having kids and struggle to get back into the workforce or dating scene.

Money cushion

Today as finance seems to be a hot topic with the younger generation they seem to want to learn more about getting out of debt and staying debt-free. I know Eva from Teens Got Cents is just one extraordinary example of wanting to learn about financial decision-making from a young age by learning how to budget using the envelope system. Good for her.

Having a money cushion is important as one of my fans told me the other day. Without a certain amount of money in the bank she gets real uncomfortable so she’s saving any way she can to build up her emergency savings so that cushion is available if needed.

All around life is tough but we must prepare ourselves ahead of time so we aren’t stuck in hot water making decisions we don’t ever want to face. I know predicting the future sounds a bit odd but it’s not that difficult when it comes to your basic finances.

You may not be the person whose financial decision-making is a bit skewed and they try to take the easy route which lands them in hot water but finding the better route is always smarter.

Do you remember the time my wife and I were putting our groceries away in our vehicle and some random guy came up to us saying he locked his keys in his car?

He was clearly needing money fast and the best way to do it was to lie and scam unsuspecting, good-hearted people out of their money. He didn’t pull a fast one over us but it’s worked for him otherwise he wouldn’t have tried it again.

Money scams happen every day in Canada and if we are not careful we could get caught up in it.

The plan

Start using a budget and find out where all your money is going first. If you don’t know where your money is going you can’t fix the problem before you run out of money.

Talk to financial experts who will guide you in the right direction because they know what your personal situation is. Financial decision-making doesn’t have to run you over physically and mentally if you do some research and invest in yourself from a positive standpoint.

People may be faced with financial decision-making and take some of the following steps when they run out of money or are low on cash.

• Sell what they own: The first things to go is what people own because it seems to be the fastest way to make money. Selling at a garage sale, Kijiji or even pawn shop is used as a last resort to get rid of items in their life that hold value.
• Max out all credit cards: This is a big no-no but when plastic is the only means to pay bills people will max them out until no one will give them any more credit. Some people just don’t care if they go bankrupt because they give up on themselves.
• Ask for a loan from friends, family, bank: No one likes to ask for money loans but as a last resort people will do what they have to do. The problem with this is when you can’t pay back the loan.
• Take out second mortgage: Taking out equity in your home or applying for a second mortgage can be very costly but people do it all the time when they need cash as a last resort.
• Haggle services: If you need something and you have skill that someone needs you can trade services to save money until you can earn more cash.
• Work for cash: Like I discussed last week working for cash is a great way to earn extra income but most people won’t do this unless they are forced to.
• Get a second job: This isn’t a bad option at all but as a last resort someone might opt to find a second job if that means it will bring in extra cash. Working for cash also means some people do thing that they shouldn’t be.
• Eat less: I know many families who run out of money and would rather feed their children over themselves or they opt to buy the cheapest food they can to stretch their dollar.
• Quit a habit: Smoking, drinking and doing drugs are all costly habits that could keep money in your pocket if you gave them up. Some people are forced to quit because there simply is no money, health reasons or the money they do get each month goes to pay for these addictions before other priorities.
• Sell the family pet: If a person has pets that they can sell they may be forced to find a new home for the pets to save money and put it towards other things.
• Stop investing: If the money stops coming in or is slow or low at filling up the bank account most people will stop paying into investments. You have to be able to live first before you can invest your money.
• Withdraw from investments: All those years of saving for retirement may just go out the window if someone runs out of money. The first place people turn is to the places they know they have money even if it will hurt the investment portfolio and cost them a fortune in fees to remove the investment money. They likely won’t care.
• Stop paying bills: If there is no money it’s hard to pay bills so with what money people some earn each month they opt to not pay bills they owe in order to put food on the table or pay the rent. The bills suffer and then they face collections departments calling them to pay.
• Visit the food bank: When the cupboards are bare and you have no money visiting the food bank as a last resort to collect donated food is what many people have to do. It’s a great community service to have and certainly an option that is welcomed by those in need even if they are too shy to visit.
• Cut telecommunication services: Many people will get rid of the cell phone, cable and internet because they are not needed. You can go to the library if you really need to search the web or check your email. If you work some employers also have a community computer where you can log in and check email or they may allow you to do it from your own computer on breaks if you have access to the internet.
• Downsize their residence or move away: If there is no money left in the bank another option to potentially make money is to sell your house. That might mean you move from a house to an apartment so you rent instead of paying a mortgage so you can save up money to get back on your feed. It may not be the best move but it’s better than losing what you already have. I know a family who had to sell their home for this reason but will never own another home because the house prices have gone up so high and they are still in debt. The only other option would be to find jobs in a city where housing costs are more affordable and move.
• Take the bus and sell the vehicles: If you have no money driving can get very costly between gas, insurance and maintenance. If you have little to no money selling your vehicle might be a better option whilst taking the bus, walking or riding a bike.
• Illegal activities: Lie, steal, sell drugs, prostitution or other means to make money which is not conventional to the average person. This could be stealing from an employer, family or friends or even co-workers. I watched an episode of Mystery Diners and was amazed at how much stealing happens at work behind the scenes of money. These may seem extreme but financial decision-making into these categories happens every day. Sometimes greed gets in the way as well.
• False insurance claims: This is not new and insurance companies catch people all the time who have false insurance claims just to gain money for whatever reason they need it for.

Although the list above is based on experiences that have been on my radar because I know people or have heard it through the grapevine it is certainly not a complete list.

Like I mentioned there are pros and cons to the above and if you were ever faced with a situation that you felt financial decision-making pushed you in a direction that you may or may not have liked I want to hear about it.

Share your experiences in the comment section here with others who seek real life stories from those that learn from their mistakes and experiences and bring them to a better place financially.

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