Tuesday, August 6, 2013

Emergencies Don’t Have to Bankrupt Your Family


According to a recent Federal Reserve report, American homeowners together owed more than $13 million in outstanding mortgage debt as of the fourth fiscal quarter of 2012. The same report showed that almost $10 million of that total mortgage debt owed was on family homes, while just over $2 million of that debt is owned on non-residential structures of some kind.
What does this mean for the average American family’s’ personal finances?
The above numbers could mean many things; for many families in debt, it means that an unexpected emergency could leave them in financial ruin. However, it does not have to mean that your family’s financial life has to be ruined should something unexpected happen.
If your family manages their personal financial situation better now, you can stave off financial ruin later should your family encounter an unexpected emergency.
Emergencies that Bankrupt Families
No matter how much money any given family has saved, it may not be enough if an emergency arises. In fact, even the most financially secure of families have gone bankrupt because of the unexpected emergencies that ruined their financial situations. Some of the most prevalent emergencies that typically bankrupt families include:
·  Natural disasters that destroy homes, cars, and other possessions
·  Unexpected medical bills that arise from any number of unexpected medical situations
·  Arrests that require families to pay bail, which could require bail bondsman services 
Hurricane Sandy and other Natural Disasters
Natural disasters historically cause the financial damage more than any other emergency. Take Hurricane Sandy, for instance. The country’s top economists estimated that after the storm passed, residents were going to have to deal with between $20 and $50 billion in financial damages. Not only did the hurricane crush the entire New Jersey Boardwalk, but the hurricane also swept away beaches and every home inside the coastal area, not to mention the hundreds of businesses.
Because the insurance companies typically do not cover natural disasters 100 percent, the families have wiped out their savings trying to supplement what FEMA has helped with, in an attempt to rebuild. Many families have since gone bankrupt.
This is just one example of how not being prepared for an unexpected emergency can ruin a financially sound family, and just one reason that managing your personal finances better now is crucial to staving off financial crisis.
Putting up Bail for Family
A personally unsettling emergency, such as having a family member arrested for any number of reasons, can also bankrupt a family. The amount of bail set by the court depends on the charges against your loved one, and depends on the likelihood that your loved one will flee if allowed on bail. Because a bail amount is a way to guarantee that the accused person will return to face the charges levied against them, the person paying the bail amount typically puts their own name – and their own money – on the line.
For many families, the amount of bail set is so much that they cannot afford to do pay it, which is why many visit professional bail bonds agents  to pay the bail for them. While the agent typically requires something as collateral, the trade off is that the family can get their loved one out of jail until the trial is finished, or the charges dropped, and they don’t have to bankrupt themselves to do so.
Manage Finances Better
A number of ways exist for families to reduce debt, and save for the future. Some include:
Paying down debt– reducing your debt in any way you can now means you can put more money into a savings account for an emergency
Consolidate debt – while this option isn’t for everyone, it is a good option for those families that have more debt than income. Consolidating your debts could help lower your interest rate and in turn, lower your monthly payment. The money you save every month can go into savings.
Zero balance transfer card - wherever possible, take advantage of zero balance transfer credit cards – especially if your credit card debt is large. This will allow you to take advantage of lower interest rates, which allows you to pay off more of the principle, which saves money in interest payments.
Better managing your family’s personal finances now is a good way to ensure your family can save money, and while using these tips might only allow you to save a few hundred or a couple of thousand dollars now, putting that extra money into savings could mean the difference between being able to handle an emergency situation or going bankrupt.


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