2005-03-17 / Business & Finance

How To Cope With A Cash Crisis

By M.P. Dunleavey

(NAPSA)-Trouble comes in threes, they say, but when that trouble in-volves money, it often arrives in crisis-provoking clusters.

The hot water heater breaks down, your laptop dies, the clutch has to be replaced, your sister decides to have her wedding in Oahu, all in the same week you get a letter from the IRS, explaining that you miscalculated your taxes in 1986 and they now own your house.

Fortunately, there are things you can do to restore your financial equilibrium. If the situation demands you act quickly, it may be a good idea to seek the advice of a debt counselor, money coach or financial planner - or even a financially savvy friend or family member who can give you a clearer perspective.

The first step is to assess the damage. Figure out how much you owe and how much money you have in reserve. Using Microsoft Money 2005 you can access and view all your account balances quickly and easily, as well as see a snapshot of outstanding debts. Second, you need to head off other mishaps-penalties, further repairs, missed deadlines.

If your emergency fund has been depleted by unexpected expenses you may consider turning to credit cards. That’s fine if you know how you are going to pay them off.

If you’re truly tapped out, you may want to consider taking out a home equity line of credit. The interest is tax deductible but those aren’t fixed rates and may end up costing more than you thought. Likewise, think twice about borrowing from your 401(k) or IRA. There are often hidden costs and if you lose your job you might have to repay that withdrawal immediately.

For additional resources so you can get back on track financially, check out the Microsoft 2005 personal finance software (www.microsoft.com/ money).

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