5 Things That You Need To Do When Your Emergency Fund Runs Out

It’s not a secret, but many people don’t have enough savings to weather a financial emergency. When it happens, the loss can be devastating—both financially and emotionally. 

Emergency funds are there to deal with unexpected expenses, such as car repairs and medical bills. They are there to protect your savings from dwindling. However, this doesn’t mean that emergency funds do not exhaust. More often than not, they go empty. In fact, around 14% of Americans have said that they lost their emergency funds due to the COVID-19 pandemic. 

If your emergency funds are empty or almost drained, you should do the following steps:

Assess Your Remaining Resources

The first thing that you need to do is to evaluate your current resources. At the same time, you need to check the expenditures that are being deducted from the said amount. Even if it’s a grueling task, you need to have an overview of your present financial standing. This has to include:


  • The remaining amount in your emergency fund
  • Your current income 
  • Your expenses and budget
  • Existing credit that you can still utilize
  • Any asset that you can rent, borrow, or even sell


If you are in a tight spot, having safety nets is necessary. You need to have a number of financial options that you can rely on so that you will be able to deal with emergencies. With a clearer financial standing, you will be able to see the routes that you can take. In turn, it will help you handle and mitigate your current situation.

Reduce Your Spending

There’s a good chance that you are already reducing your costs and expenses. Becoming a smart shopper in groceries by buying only the essentials is excellent to do so. There are also desperate measures that you can take, such as halting the automatic contributions in your savings and retirement accounts. Furthermore, you can also stop monthly services (i.e., gym, cable, and other entertainment platforms).


  • Aside from these things, you can also do the following:
  • Increase your insurance deductible to lower your premium payments
  • Lower your tax withholding at your employment
  • Negotiate alternatives or new plans for your internet and phone services
  • Opt for zero balance transfers

Negotiate With Creditors

If you have existing credits and balances, it is important that you can contact your creditors and lenders right away. By doing this, you will be able to manage your debt without incurring expensive fees and penalties. Whether you believe it or not, creditors are willing to enter compromises with their clients. You are free to explore the said options:


  • Forbearance or deferment of student loans; you can also try the coronavirus student loan relief package
  • Loan restructuring and mortgage forbearance; this includes the coronavirus mortgage relief
  • Applying for a skip-a-payment program for your car loans
  • Utilizing credit card hardship deferment options

Using Hardship And Deferment Methods

When you talk with your creditors, you should be honest about your financial situation. There’s no need to hide anything. The more you can explain your current predicament, the bigger your chances of acquiring relief on your debts and other responsibilities. 

If your creditor is offering a hardship program, you have to guarantee that you know its terms. After all, there are stipulations on this matter; if you fail to meet the agreement, you will get into trouble. For instance, deferring loan payments can give your temporary financial relief. But at the same time, it could get problematic if the agreement requires you to provide an extensive payment after the program ends. 

Utilize Your Existing Assets

Now that you are in a shaky financial standing, it is essential that you can implement some measures for you to be able to survive. Specifically, you need to monetize your assets. You might want to try the following sources of revenue.


  • Rent your home – If your home has an extra room or space, you are free to open it for rent. But of course, you have to reconsider this method, considering that it opens you to the risk of contracting the coronavirus. At the same time, you also need to do some background checks on your tenants to ensure your safety.


  • Access tied-up equity – You can also sell your property to an access tied-up equity. You can take this route, especially if you have a large mortgage payment and can no longer pay for it. Always remember that your home is an asset that you can invest in. And since it is an investment, its price is always tangible to the depreciation and appreciation. 


Money Saving Tips

About Author