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In Part I I gave the example of Kelly, the responsible college graduate who’s finances took a turn for the worse. If you haven’t read about her attempt to avoid bankruptcy, you should.
You should always keep this in mind: You must be proactive with your finances because by the time you are really in need of some money, you probably won’t be able to get any. For instance, if you’re overdrawn on your checking account, you probably won’t be able to get another account or a credit card anywhere until you pay the bank. If you’ve missed a few mortgage payments you won’t be able to refinance and access that equity in your home at a reasonable rate. You absolutely must secure some backup funds as soon as it appears that cash may be tight in the future. If you’re about to change jobs, make sure you’ve got plenty of room on your credit cards or you open up a line of credit on your home so you have some room to breath. In fact, I recommend you always have 6-12 months of expenses available to you in the form of cash reserves at any given time in case disaster strikes. The last thing you want is to suddenly find out you’ve been laid off from your job and not have any money saved up or any credit available to hold you over until things pick up again.
If you don’t have 6-12 months of expenses available to you right now, get it today; you’re in a very dangerous situation. Get a credit card that you don’t use and keep it for a rainy day or open up a line of credit on your home just in case. Once you’ve done that, start saving, because, ideally, your 6-12 months of reserves should be in the form of liquid cash.
This is a simple solution that will save you so much stress and heartache should you run into some financial problems, and trust me, you will run into financial problems at some point, you better be prepared when it happens.
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