Welcome back to Goodbudget 911: Crash Course. Last time, you learned about Josh and Ashley, and about the financial crisis they were faced with when Josh lost his job. We saw them take a hard look at their spending so they could make the changes needed to put food on the table and pay their bills.

Now, it’s your turn to assess your financial emergency so that you can make some practical changes to help you survive. Remember, if you’re budgeting with a partner, be sure to include them in these conversations so that you can make decisions together.

1. Acknowledge the situation

First off, make sure to acknowledge that you’re in a really tough situation and it can be stressful! Whether you have lost a job, like Josh, or had your hours cut, or something else, it’s easy to feel that you did something wrong. The reality is the situation might have been out of your control and it won’t help to beat yourself up.

Still, climbing your way out will be hard. Remember to give yourself grace throughout this process and focus on the things that you can do, rather than on all of the other stuff that might be out of your control.

2. Evaluate the severity of the emergency

Because Josh and Ashley had a small amount of savings, they knew pretty soon after their emergency happened that they would have trouble paying for essentials. That was a big deal for them, especially because they had children that they needed to provide for as well. They knew their emergency was pretty severe, and that prompted them to start making quick changes.

Take a step back and ask yourself these questions to help you assess the severity of your situation.

• If you lost a job…
  1. What amount of income have you lost?
  2. What expenses will you be able to pay for with the money in your checking account right now?
  3. When will you start to have trouble paying for things like shelter and food?
• If you’ve received a large bill…
  1. How much is it?
  2. How quickly does it need to be paid?
  3. Can it be deferred or partially relieved?
  4. How much of the bill can you pay soon, if any at all?
• How much savings do you have?
• Is there anything you could sell to quickly bring in some money?
• Do you have friends or family that can help?

Only you can determine just how severe of an emergency you’re experiencing. But if you’ve lost a significant amount of your income, or if your hefty bill limits your ability to pay for food or other essential bills for the next 30 days, then you will most likely need to take quick action. See some ways you can respond below.

3. Respond

If you need to take quick action to help you get through your emergency, there are some practical steps you can take. Follow Josh and Ashley’s lead by creating a lean budget and then find ways to fill in the gaps in your income if possible. And if you’re not using Goodbudget already, try creating your new lean budget with Goodbudget. You can sign up here.

Create a Lean Budget

Remember, Josh and Ashley didn’t keep a budget prior to their lean budget. If that’s you too, take a page out of their book and start creating your lean budget by taking a look at how you’ve spent money during the last month. From there, create your budget and then whittle it down by cutting out nonessential spending. Here are some expenses Josh and Ashley paused or reduced in their new lean budget:

• Paused fun spending, like Family Fun, Gifts and Date Nights
• Reduced Gas, since Josh won’t be commuting to work anymore
• Reduced Childcare – Josh will have more time at home now, but may need to have a babysitter for times when he’s out looking for jobs.

Go ahead and make your new, lean budget now. If you’re new to using Goodbudget, see how to create your budget while on the website. You can also find more ideas for making quick cuts here.

Create an expense schedule to plan out payments

Once Josh and Ashley created their lean budget, they were able to redistribute their existing money so that they could pay bills. Here’s where they found some extra money to redistribute:

• They first made a list of bills and essential spending that they needed to be able to cover soon. The things they’d need to pay for first would be food and rent. After that came utilities.
• They had a small emergency fund, and were very slowly saving up for a vacation. They planned to divert that cash to help them pay for food and rent until Ashley got her next paycheck and Josh started receiving unemployment benefits.
• That diversion would not be enough to cover their next batch of utility bills after rent and food were paid for. They further planned to arrange for late payments with their utility companies.

Now it’s your turn. Go ahead and make your plan for how you’ll pay for upcoming bills. Start by writing bills out in order of their due date, and plan out how you’ll pay for them with the existing money you have available. If it looks like you’ll run out of available money before all of your essential bills are due, try arranging for late payments with your utility companies or landlord if you need a couple extra days.

Make Up for Lost Income

If creating a lean budget and scheduling out your bills aren’t enough, consider ways you can fill gaps in your income. Josh and Ashley decided that he would file for unemployment until he can get another job. Here are other things you can consider:

• Pick up a gig
• Seek forbearance on your federal student loans or mortgage
• See more ways to fill the income gap

By making up for lost income, you’ll have a better shot at getting bills paid on time and surviving the rest of this emergency.

Until then, know that the hardest part of this journey is happening now. With the planning that you’ve done so far, you’ve given yourself the best chance of getting through your emergency.