How to Get Financial Help When You Need It

Presented By: Pennsylvania Capital Management

Do you know how to ask for financial help? If you don’t, you might find yourself in a tough spot, desperate for answers to navigate a sticky situation.

In sports, desperation is being down by three home runs with two outs in the bottom of the ninth. 

In love, desperation is searching Match.com on February 13th. 

In movies, desperation is hanging from a helicopter with one pinkie. 

We all know what desperation means, no matter the genre. 

You’ve got no shot, no answers, no hope. And, even if we don’t spend much of our lives in desperate situations, we can imagine how it feels: like being lost in a national forest at sundown. We want out, but we can’t find the way out. Now, when it comes to financial desperation, we can joke all we want about grand slams and Herculean pinkies but this is serious business—the kind of trouble that puts families in financial ruin, destroying their lives with little hope for bouncing back.

In my multiple decades in this business and my experience with many clients, I’ve seen it firsthand: financial conflict ruins marriages—and lives. 

In 2023, CNBC polled over 4,000 working Americans and inquired about their current levels of financial stress. 74% of respondents cited being stressed about finances, and 61% felt they were living paycheck to paycheck. If you’re living paycheck to paycheck, you must dial in your spending habits and stick to a budget. However, those who are in a better financial situation still need to be cautious and pay attention to the signs that things are taking a downward turn, especially with the ever-changing state of our economy. 

Read on to learn about the warning signs so that, in case you’re on a downward path, you can avoid a worsened financial state or complete hardship. 

What Is Financial Hardship?

No, financial hardship doesn’t mean your cable bill went up—again. Hardship isn’t that you have to decide between the hundred-dollar shoes and the two-hundred-dollar shoes. Hardship isn’t even the fact that you haven’t gotten a raise in a few years or that your investments are only making 6% instead of 10.

What’s the definition of financial hardship?

Financial hardship means you are dangerously close to exhausting all of your financial resources, blowing all of your savings, struggling to pay your bills, destroying your credit rating, and searching for shelter. 

In simple English, it means your lifestyle expenses continue to exceed your earned income. If this sounds familiar, it’s time to figure out how to ask for financial help. One of the first things I ask my prospective clients is, “Do you live above your means, beneath your means, or at your means?” 

If the answer is “way above” their means, that’s trouble (unless they have many zeroes attached to their name). Frankly, I’m not interested in that person as a client. No matter what happens, no matter what rate of return we can achieve, the situation is going to be a failure. It’s not a question of “if”; it’s a question of “when.”

To be fair, these financially desperate situations can come about for all kinds of reasons, whether it’s an unforeseen circumstance (a health emergency that drains your portfolio or loss of a job) or a lack of attention to financial affairs. No matter the reason, the result is still the same: You’re living in desperate times—and very often, this happens due to your actions.

As I said, I hope this doesn’t apply to you or your loved ones, but here are the most vital strategies for pulling yourself out of the mess if indeed it happens to you.

Identify and Address All Warning Signs

You know the rule: Every time your clock springs ahead or falls back an hour, you change the batteries in your smoke detector. You do it so your batteries never run out and the smoke alarm never fails you in the event of a real emergency. It’s like an insurance policy on an insurance policy.

What does that have to do with getting financial help? You need to help yourself out by checking your batteries. That is, you need to recognize the warning signs that come with the descent from financial stability to financial ruin. Ignoring the signs is like forgetting to change the batteries. 

The best way to avoid ruin is to recognize those signs before the fire starts. That way, you can address issues before they become too desperate.

There’s a good chance you’re putting your family at major risk if you: 

• Consistently take cash advances out on your credit cards 
• Frequently make only the minimum payments on your credit cards 
• Miss payments (or make late payments) for bills of any kind, triggering late fees and more interest)
• Are unaware of your total debt
• Dip into your savings to pay monthly bills 

Of course, the extent to which you do any of them is what will determine how deep the trouble is. However, suppose your financial habits include any of the above situations. In that case, your first steps should involve recognizing them and reviewing strategies about how to get yourself out of those habits, such as figuring out methods to reduce your overall debt or getting yourself on a payment schedule. Hence, you never make a late payment again. 

I don’t just have one strategy to share. I have three places where most people can start if they’re in a financial pickle.

1. Figure Out How to Cut Costs

Now that you’ve acknowledged you’re swimming with the sharks, it’s time to get yourself up into a lifeboat.

The first opportunity you have to get yourself some financial help is figuring out how to cut costs. First and foremost, your job is to reduce what you spend your money on—and even open your eyes to new possibilities for ways you can cut. A lot of people can find ways to cut costs at home by taking a more in-depth look at every single outgoing expense and simplifying where they can–even if it’s uncomfortable or a bit of a sacrifice. Trust me, it’s better than being in true financial ruin. 

For example, if you’re a two-car family, can you figure out how to get by with just one? You’ll not only save money in payments, but you’ll earn a little money from the sale of the car and reduce associated costs (maintenance, gas, insurance).

Is it your ideal situation? Maybe not. But carpooling, using public transportation, or utilizing a city’s Zipcar program may save you money in the long run–and help you get back on your feet. 

Also consider using Uber, Lyft, ridesharing services, or public transportation to reduce out-of-pocket costs in the place of the second car. You may need to wake up earlier or allow more time for travel, but you will save some money along the way. Tough times require tough decisions—and to get comfortable, you’re going to have to move out of your comfort zone. 

Other cost-cutting strategies can come into play if you own a home, such as consolidating your debt with a home equity line of credit.

This may be the time for you to dip into your liquid reserves account to help get you back on your feet. Remember: You must remain diligent in your strategy to refill your emergency bucket over time so it will be there for you in financially difficult times. 

I still would advise against pulling from any retirement accounts, because your money grows tax-deferred or tax-free and pension accounts should be one of the last spots you take from.

2. Don’t Be Too Proud to Get Financial Help From Other People

We all know how an embarrassed puppy acts. little Bluto runs to the corner, hides his head, and hopes his owner won’t see that he just gnawed on Pop’s favorite loafer. When people get into some kind of financial trouble, their instinct is to act like Bluto—run for the corner and hope nobody will know, nobody will see, and nobody will judge.

That’s the worst thing you can do. 

Your number-one tactic if you’re missing payments and running out of money is to contact a few different folks. You should start with Consumer Credit Counseling Service agencies, which are non-profit organizations that provide counseling for families who need to get financial help. Counselors with basic money management and debt-consolidation experience can help you look at your specific situation and help you figure out a plan for digging yourself up and out of the hole.

Second, contact your bank (if necessary) and ask for a hardship specialist, who can provide similar counseling and advising services. Finally, I would call all of the places where you have necessary monthly bills (like gas and utilities) to explain exactly how and why your finances have changed. Try to work out some kind of alternative payment plan to give you some relief. 

There is also one other group I would try: your family. It may seem obvious, but if your family is in a position to help. If you have a good relationship where they’d be willing, a loan with a low interest rate from a family member might be the way to go.

One way to do it is by drawing up a contract where the money you’re loaned is deducted from any inheritance you may get down the line. In any case, if you can borrow from family, I would have a legal document drawn up so that the lending parties, such as your parents, are protected and will be comforted in knowing what the loan terms are.

3. Don’t Take Bankruptcy Lightly 

If you’re in an extremely tight spot—like a crisis-type tight spot—then you’ve probably had to ask yourself this question: What’s the end game? As in, will I end up on the street? What if I can’t save myself before it’s too late? Can I still get the financial help I need? 

Fortunately, some companies negotiate with your creditors on your behalf for you to pay a settlement rather than the full amount you owe. 

These do come with some risks and often costs, in that they can take a long time to have debt settled. Some require payments for three years before they’ll settle, to ensure that they’ll make their money. There is no guarantee that you’ll have your debt settled by one of these companies, but it might be a last resort before you consider filing for bankruptcy. 

As you can imagine, this is serious. It’s not a willy-nilly decision you should make just because you think it’s the answer to freeing yourself from your debtors.

While it’s true that bankruptcy will eliminate your debt and give you a clean slate, it also comes with consequences, namely in the form of bad credit. It will stay on your credit report for seven to 10 years depending on the type of bankruptcy that you declare, meaning it may be hard to buy a home once you do get back on your feet. There are two types of bankruptcy available. 

• Chapter 13 allows you to keep property, such as a house or a car, as long as you can make good on payments you’ve defaulted on (you’d have a series of years to make good). 
• Chapter 7 means that all of your assets may be turned over to the people you owe money to, including your home. 

Both kinds of bankruptcy can buy you some time to get on your feet, because they may stop foreclosures on your home or utility cutoffs.

Final Thoughts

True financial hardship is incredibly difficult to navigate, no matter how you manage to end up there. What matters is that, in times of disaster, you try to let clearer heads prevail and formulate a plan to get yourself out and get some solid financial help before the problems become worse. 

Whether you do it yourself by cutting costs, sticking to a tight budget, and living only within – or under – your means, figuring out how to get financial help is no small feat, and every decision has pros and cons.

Seeking some sort of counseling may give you an advantage, but preparedness is also a huge part of staying ahead of difficult financial times. With a little bit of research and a lot of diligence, many people can pull themselves out before the foundation starts to crumble by cutting back on costs, making a budget, and ensuring that all payments are made on time. Simplifying household expenses may not be your preferred way of saving, but it’s crucial not to live above your financial means. 

A financial expert or professional counseling service can provide structured, actionable advice for the next steps. Don’t wait.