Here are suggestions for staying focused and avoiding costly decisions during periods of change.
- Getting Married.
Understand each other’s attitudes toward saving and spending money.
Know about any major outstanding debts held by your partner.
Set short-term and long-term financial goals.
- Buying your first home.
Ask questions and fully understand the fees, the interest rate, and when loan payments and interest charges will begin.
Shop around at multiple lenders and read all the fine print.
Do your research and know up-front whether you are being offered a conventional or government loan, and whether the loan features a fixed rate, adjustable rate or some combination of the two.
- A new child.
Get spending under control (preferably with a budget).
Build your savings accounts for short-term expenses (especially if a spouse will be leaving a job) and long-term needs (including college tuition costs).
Review and update your insurance coverage (life, health, disability) and wills to designate who will raise the child and handle finances in case of your death.
- Death of a family member.
Contact the deceased person’s attorney and other financial advisors.
Before committing to any funeral costs, consult with other family members and the lawyer about any prior instructions or arrangements.
Locate important documents, such as insurance policies and the most recent will (an original, not a copy).
Obtain multiple copies of the death certificate, which will be needed to apply for death benefits (such as through life insurance policies or Social Security) and to access the deceased person's bank or brokerage accounts.
If the family’s medical insurance is through the deceased person’s employer, review options for continuing coverage.
- A medical emergency.
Carefully review all doctor and hospital bills and insurance claim payments/denials, because mistakes do happen and uncorrected errors can be costly.
If you are unable to resolve a billing dispute with a doctor, hospital or insurer, contact your state consumer protection office or insurance regulator for guidance.
Don’t allow the debt to be turned over to a collection agency, which could damage your credit score. Instead, contact the service provider’s billing department to try to negotiate a reduced bill or a payment plan with monthly payments. Ask about assistance from a government program or charitable organization.
Consider turning to a credit counselor for guidance, but choose one carefully because some offer questionable or expensive services and others may be scams.
- A divorce.
Consult legal counsel because uniformed decisions could cost you.
Consider discussing tax issues with an accountant or other advisor because certain decisions, such as who will claim children on his or her tax return, can affect each parent’s tax liability.
Reduce legal fees by working with a mediator to resolve issues such as child custody.
Cancel joint credit cards to prevent the other spouse from running up large bills. Start or build your own credit history independent of the marriage, such as by opening a new credit card in your name only.
Decide who is responsible for debts incurred during the marriage.
Update your will and the list of beneficiaries you designate on life insurance policies, retirement savings accounts and U.S. Savings Bonds, so your money and other assets will go to the right people upon your death.
- A job loss.
Keep spending under control so you can pay your bills using existing bank and brokerage accounts for the next three months.
Avoid withdrawing or borrowing money from your retirement savings. If you anticipate problems paying debts, such as your mortgage or the minimum due on your credit card, contact your creditors immediately and attempt to work out a payment plan.
Carefully review your employer’s severance benefits, including the temporary continuation of your salary and health insurance, and try to negotiate a better deal.
- You can’t make your mortgage payment.
Contact your loan services department and find out if you qualify for modified loan terms or other options to help you keep your home instead of losing it to foreclosure.
Seek help from a trained homeownership counselor. Find a reputable counselor; contact the Homeowner’s HOPE Hotline at the Homeownership Preservation Foundation (888-995-4673 or
www.995hope.org) or the U.S. Department of Housing and Urban Development for a referral to a HUD-approved homeownership counseling agency (800-569-4287 or
www.hud.gov/offices/hsg/sfh/hcc/hcc_home.cfm).
- You’re having problems making credit card or other loan payments.
Be proactive and address the problem as soon as possible by contacting your lender to try to negotiate a long-term, workable solution.
Consider asking an attorney, accountant or another trusted advisor to refer you to a reliable credit counselor who, at little or no cost, can help you develop a recovery plan.
