How to Help My Family Through Financial Crisis

When helping your family battle a financial crisis, it is best to show support and ask that each person be honest throughout the recovery process. For example, if you learn that a spouse has a secret credit card, thank him for acknowledging that the account exists and then ask him not to incur any new charges. This approach is the best and most effective way to create an environment in which you and your family can create solutions and work together as a unit. Work with your family to get back on track financially.

Instructions

1

Sit down with the adult members of your household. Plan the conversation in advance and select a time when each person can focus on the family's financial crisis and answer questions openly about spending. Avoid having the conversation at the end of a long work day or during mealtime.

2

Take stock of the family's financial standing. Itemize each debt, line of credit, loan, judgment and collection. Compare the family's earned income against its liabilities and discuss ways to shore up spending. Reduce spending in areas such as entertainment, dining and travel first. If necessary, reduce spending to the bare minimum, which may include rental costs, health insurance, school fees, food, transportation and fuel, clothing and utilities.

3

Contact each creditor and request a reduced interest rate for all household lines of credit. Write a letter or contact your creditors by phone. Explain that you cannot afford to pay the added fees associated with having a higher interest rate. A one to two point reduction can translate into savings each month.

4

Ask your creditors for help. If you cannot make an impending credit card payment, contact your creditors immediately. Provide supporting documents, if requested, and explain the financial reasons why you and your family cannot meet your financial obligations. Ask a credit specialist to waive your family's minimum balance for the impending billing cycling -- finance charges still apply and a waiver does not discharge the card balance owed for the month, it simply postpones when the payment is due.

5

Create liquid assets. Examples include money that is deposited into a savings or checking account, certificate of deposit, bonds and mutual funds. Speak with a financial advisor about clearing out these and other liquid assets to obtain fast cash. Consider selling vehicles, downsizing your primary residence or auctioning jewelry if you cannot budget your family out of debt in five years. Avoid depleting retirement accounts and education funds for minor children.