People with good and even great credit can, at times, find themselves in a bad financial situation. Whether it’s a home loan gone upside down, unemployment lasting longer than expected, or medical bills piling up from a recent accident, the unexpected can take control of your financial plan and often your credit score. While there is no simple cure, here are a couple tips to keep in mind when you face some of the more common financial emergencies.

1. For many, purchasing a new house meant an opportunity to make money by watching their home value blossom. Due to risky loans and low or zero down payment requirements, many now find themselves upside down on their home loan, owing more on their mortgage loan than the home could sell for in the market. Walking out on the mortgage may seem like a simple solution, but the foreclosure on your credit report will have significant impact on your credit score for several years to come. If you can continue to make your monthly mortgage payments, try to stick with it. Now that many of the speculators and real estate investors have pulled out of the market, there is some stabilization in home prices and increases in home purchase volume.
2. Divorce is never easy on the heart or pocketbook, but oftentimes it’s bad for your credit health as well. An important part of divorce proceedings is making sure your name is removed as an accountholder on any mortgage, credit card, loan, or even banking account that you will not be responsible for going forward with. While closing old credit cards will definitely affect your credit score, it’s better than leaving your name on the accounts and the risk that your ex-spouse will have late payments, default, or have balances charged off – all of which will affect your credit if your name is still on the account. Take the opportunity to open new credit cards and banking relationships so you are in control of your credit health and once again standing strong and independent.
3. With unemployment lasting on average of over 25 weeks, many are finding their emergency funds running dry. Don’t give a credit card issuer any reason to cancel the card or reduce your limit; use your credit regularly and wisely if you find yourself unemployed. Credit cards can become the lifeline to covering daily expenses in periods of extended unemployment.
4. It’s easy to become overwhelmed quickly when medical bills start stacking up in your mailbox. Unfortunately, they are not going to go away. The best thing you can do is get a sense of your total medical obligations and call the hospital or medical service accounts to see if you can work out a payment plan. Past due or unpaid medical bills can show up on your credit report and will negatively affect your credit score.

Financial emergencies are hard on the family, hard on your finances, but they don’t have to be hard on your credit health. Be proactive in determining the best way to protect your credit in any financial crisis; a good credit score helps you keep your credit costs to a minimum and provides you with better options and offers when you go in for a loan, a new mortgage, or new credit line when you’re ready to start rebuilding your financial life. These tips aren’t foolproof nor will they guarantee that life will be easier after a major life trauma like divorce or unemployment, but it can help you minimize the financial strain as much as possible and help your credit survive till the sun comes out tomorrow.

eBillme, a payment alternative that lets you pay cash when you shop online, is an innovative solution to debt-free, credit-free shopping that gives you the convenience and savings of online shopping without a credit card. Swapping your credit card shopping habits with eBillme avoids interest rates fees, identity theft, and possibly even some of those spontaneous, one-click impulse buys. For careful consumers sticking to spending only what’s in their bank account, eBillme is a free and easy option that is less hassle than a debit card, less complicated than PayPal, and far less risky than credit cards.

eBillme is super simple. Just shop where you normally shop and when you’re ready to check out, look for the eBillme logo; it’s available at over 800 merchants and growing every day. If eBillme is a payment option, select it and submit your purchase and eBillme will send the bill to your online banking account. Log into your online bank and pay the eBillme bill just like you would your cell phone or credit card bills and viola — the retailer will release your purchase for shipping! While you will dodge potential credit card debt, paying cash will immediately shrink your bank account with every purchase, so make sure your late-night shopping sprees won’t shortchange you on your utility bills the next morning. This also limits the type of purchases you can make online since you will need to have the available money now in order to buy, rather than relying on credit to let you pay it off later.

eBillme also provides consumers several money-saving opportunities including rebates, deals, giveaways and even cash back on purchases. eBillme Stores helps you save more money by offering rebates for shopping with eBillme at select merchants, while the Debt Free Shopping Mall helps you search through products, deals, and even giveaways and contests at participating sites. eBillme Rewards gives shoppers more to cash in on by providing similar earning power as a rewards credit card with 1% cash back on all purchases. Along with the savings comes some protections, like Satisfaction Guarantee for no-hassle returns, a Buyer Protection policy that price-matches your order within 90 days of purchase, and protection against hackers and identity thieves.

Paying with cash at eBillme gives you the control, convenience, and security often only associated online banking. It is a great option to keep in mind if you are trying to keep yourself from getting in over your head with debt or if you don’t have a credit card yet. However, keep in mind that retiring your credit card from online shopping also means you will not be building credit or improving your credit report through regular credit use. But at least with eBillme, you can shop debt-free using secure cash payments with some of the benefits of a credit card and absolutely none of the fees.

What started as an innovative automaker’s marketing ploy, which helped move inventory by offering purchase protection plans for jobless customers, is now becoming a standard level of consumer support across many different markets. Companies are coming up with more creative solutions—rebates, penalty-free refunds, special offers should you become unemployed—to get consumers back into stores and opening their wallets again.

Hyundai kicked off the recession trend of buyer incentives with its Assurance plan launched in January, which gives customers who are laid off within a year of purchasing a new Hyundai the option of returning the car and being absolved of the remaining payments (up to $7,500).

And where one good offer goes, many were sure to follow:

AutoNation, the largest U.S auto dealership chain, pledged to cover car payments of the recently unemployed for 6 months through its Protection Payment program; Ford’s Advantage Plan covered monthly car payments of $700 for a year for customers who bought a vehicle between March 1 and June 1 and lost their job by the end of 2009; GM’s Total Confidence program covered payments of $500 for up to 9 months for customers who purchased between April 1 and June 1 and lose their job within 21 months of purchase.

With unemployment creeping to near 10% nationally, job-loss protection offers are a smart strategy to give nervous consumers a sense of security to spend money while also easing consumers’ fear of possible unemployment. The idea to provide offers based on possible future job loss spread quickly from carmakers to financial service companies to airlines and even to drug companies.

Nowadays, a little peace of mind has become a way of business.

• Need that new dishwasher or stove but concerned about losing your job? Sears’ Buyer Protection Plan gives consumers a safety net in these troubled times. Use your Sears card to purchase a major home appliance totaling $399 or more and you are protected if you are involuntarily laid off. If consumers lose their job after 60 days and up to one year from the date of purchase, 1/12 of the entire purchase price is credited to your account each month until it is paid off or you are employed again. The Buyer Protection Plan is in a nationwide testing period from July 6 to August 1, 2009.

• Want to get the high rates of a CD but concerned about the penalties that could come with locking up your money in a CD? Discover Bank aims to help you earn more while worrying less. Their new Penalty Free 12-month CD earns consumers 2.00% APY, and if customers loses their job, they can withdraw their savings principal plus interest without any penalties or fees.

• JetBlue wants you to plan your vacation free from the worries of your employment status. If you are involuntarily laid off, The JetBlue Promise Program will fully refund your fare as long as your travel plans are prior to December 31, 2009, you are over 18, and you paid for the itinerary. JetBlue also offers a Getaways Vacation Package Refund as part of the Promises Program. The Promise Program was originally slated to end in June, but has been extended through 2009.

• Don’t let unemployment stop you from staying healthy. Pfizer’s MAINTAIN (Medicines Assistance for Those who Are in Need) program is a free medicine program for the newly unemployed. Pfizer‘s MAINTAIN program gives away 70+ types of prescription drugs for up to a year or until you become re-insured. To be eligible, you must be taking a prescribed Pfizer medication for 3 months prior to becoming unemployed; enrollment is open through December 2009.

• K-Mart is running the Smart Assist Savings card pilot program, in which unemployed customers can save 20% on all Kmart private label goods for 6 months. This discount program is being run first in Michigan, where unemployment is at the national high of over 14%.

In these rough times, it’s great to see companies reach out to meet consumers half way on the risk scale of unemployment. Not only are companies going to drive additional sales by providing consumers the confidence to shop, but there’s a significant amount of good karma these companies are building with both unemployed and employed consumers alike.

Are you prepared to handle a surprise disability or a serious illness, the loss of your job, a natural disaster, legal problems or some other financial industry? There are too many people out there that simply are not preparing themselves for the unexpected expenses that may be incurred over time, even those that are as minor as a home or vehicle repair. By planning ahead for financial emergencies you can significantly minimize the amount of stress that normally occurs when these types of emergencies rear their ugly heads.

There are a lot of different ways that you can plan ahead for financial emergencies. Many of these tactics are small and do not take a lot of time or money, but they have a grand impact on your financial readiness, should an emergency ever occur that requires you to tap into savings or other sources of financing.

>> One of the best defenses that you can possibly mount against emergencies is to acquire adequate insurance. You should take the time to check and see if you have the right amount of insurance for Life, Property, Disability and Long Term Care insurance for some much needed peace of mind.

>> You should take the time to prepare an emergency budget so that you can determine the minimum amount of income and the minimum amount of expenses that you would need should a financial crisis occur.

>> You should be aware of potential loan sources, or establish potential loan sources like personal lines of credit or home equity loans so that you can get the emergency funds that you need, when you need them, without worrying about whether or not you will be approved when there is no time to waste.

>> You should put together an emergency savings account fund, so that you always have easy access to savings account money that will help you get through an emergency when there is no other source for lending or financial aid. The more you have in savings, the more readily you will be able to weather the storm when a financial emergency occurs.

>> You should remember that good times do not last forever, and neither do bad times. By creating solid investments and building up your investment portfolio you can significantly reduce the need for a much larger emergency fund in the long run. By varying what different protections you have, you can create a much stronger protection plan, should a financial emergency ever occur.

>> You should take the time to completely and fully plan out your estate. This way, if you should happen to pass away unexpectedly the remainder of your family will remain financially secure even when they cannot count on your income to support them. A fully thought out financial estate plan should include where your assets should go, and should also include adequate life insurance so that your mortgage and other bills and debts can be paid without requiring your loved ones to struggle any harder than they have to in your absence.

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For most people, the thing that launches them into credit trouble in the first place is an unexpected financial emergency. Individuals who pay their bills on time, people who use credit cards wisely and people who always keep up with their mortgages can suddenly be thrown into a complete financial crisis when a surprise strikes them. Here are ten ways that you can prepare for and handle financial emergencies.

1 - Plan ahead in order to make a difference.

Start a savings and make provisions for whatever may occur. You should put a portion of every pay check into a savings account.

2 - Expect the unexpected so that you may plan and prepare accordingly.

You should be prepared for every scenario. Plan for the worst, so that you can handle anything that may come your way.

3 - Pay yourself first rather than waiting until the end of the month to put money into your savings.

Putting the money into savings now will ensure you do not spend it easily through out the month. Otherwise, you may not be able to save when the time comes.

4 - Increase your income if you are having trouble paying your expenses.

This may entail finding a better job, or supplanting your income through another job. You may also be entitled to a raise at your current job.

5 - Sell off some assets to accrue extra income if you are having trouble paying your expenses.

This can be as small as a garage sale or as large as selling one of two cars. Having stuff is pointless if you are unable to pay for rent or utilities.

6 - Borrow against your home if you absolutely have to, so that you can pay off emergency expenses without allowing them to overwhelm you and put you further into debt.

The equity in your home should be used as a last resort, as you are putting your home at risk. It is your largest asset, however, so it can be helpful for a tight spot.

7 - Call on friends and relatives to see if you can get some financial assistance in your time of need.

Those close to you can provide the assistance you need. Everyone is connected and those close to you would help you; you would help them if the situation were reversed.

8 - Defer your retirement contributions, funneling the money toward a more important cause such as an emergency expense instead.

If you are unable to proceed in the now, planning for the future is worthless.

9 - Seek professional help if you cannot find any other way to deal with the emergency expense without putting yourself into debt.

There are experts out there who are specially trained just for this purpose. Do not ignore this important resource.

10 - Declare bankruptcy if there is no other option available for you to overcome the obstacles created by a financial emergency.

Bankruptcy is a government provided way to get out of debt and start anew, although it carries with it a stigma which will be hard to shake off of your credit report.

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Financial planning articles and books often recommend that you put away between three months and six months of your expenses into a savings account. On occasion it may even be recommended that you put away between six and twelve months of your average expenses just in case anything should happen. But what if your first emergency is an eleven to eighteen month financial crisis? It really is quite difficult to plan on the emergency situation that will come up and exactly how long it will last. For this reason, it is best that you put yourself in the best possible financial situation and stay there.

An emergency fund can easily provide the financial resources that you need whenever a financial emergency prevents you from earning an income, or consumes your regular household income. Some of these emergencies may include a major illness, loss of income or another type of financial emergency. Minor emergencies also make such financial planning necessary; such as an unexpected home repair or vehicle repair, or medical bills that you did not anticipate. If you want to establish financial security, then planning an emergency fund is absolutely vital.

If you do not have an emergency fund in place, then you may feel compelled to acquire debt instead using a credit card for traditional expenses such as a mortgage, rent or groceries. This new debt can take as many as several years to repay, and interest will be accrued to cost you even more unnecessary expenses. However, if you decide to regularly allocate income to an emergency savings account or a short term savings account, you can contribute significantly to the security in an emergency that the future may eventually bring. In doing so, it is highly recommended that your emergency fund be looked at as an additional bill that needs to be paid, just as any other obligation would be required of you every month.

Here are some tips to keep in mind for planning an emergency fund or emergency savings account.

1 - How much funds should you have?

At least three months of expenses should be stored in your emergency fund, but more is always better. It is vital that you be consistent with your deposits, and only dip into your emergency savings when you absolutely must. Look for high interest sates for such short term savings accounts, so you can let your money make money for you while it is sitting.

2 - Come up with a minimum “comfortable balance” and stick to it.

Once you have reached this, you may also want to begin considering longer term savings accounts.

3 - The amount that is saved from your budgeting can go into your savings goal or your emergency fund, or can be split between the two.

This way you will be achieving your goals in your savings and still contributing to your emergency fund at the same time.

4 - Whenever possible, pad beyond your first few months of expenses when putting together your basic emergency fund.

Keep in mind that the more you plan, the more prepared that you will be when it comes to handling emergencies.

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Are you financially prepared for disaster? Answering this question may not be as easy as it seems, because there are a lot of different considerations that go into preparing yourself for one of many different disasters that can occur. For example, are you financially prepared to handle a natural disaster like a floor or a hurricane? Are you financially prepared for a financial disaster like becoming disabled or losing your job unexpectedly? Are you wondering what goes into determining your financial preparedness for different types of disasters? Here are some tips that may help you become more financially prepared to handle a variety of different disasters that would be taxing on your financial stability.

- Do you have an emergency fund, or a rainy day fund?

Most people have trouble putting away money for emergencies because they do not put enough thought into the types of emergencies or disasters that can occur. Have you put consideration into how you will deal with emergency home repairs, auto repairs, health and hospital costs or other expenses that can crop up quickly and without warning? Having an emergency fund is absolutely vital if you want to weather the storm that comes with these types of financial emergencies. If you become sick or lose your job unexpectedly, will you have enough money to cover your mortgage or keep gas in your tank?

- Can your credit score accommodate for an emergency loan or line of credit if you should suddenly need cash quickly to tackle a disaster or an emergency?

If your credit is good enough that most lenders will work with you, then you can consider yourself to be protected. If you do not believe your credit is good enough or if you’re not sure, it might be wise to take out a credit card now that you will only use in absolute emergencies.

Being financially prepared for disaster does not necessarily mean having thousands of dollars floating about waiting for a reason to be used. What it does mean, however, is anticipating potential disasters or emergencies that could come up, and responding to that risk by preparing accordingly. Having a few hundred or a few thousand dollars saved up in advance can really be useful should an emergency come up that prevents you from working, or that requires that you spend a great deal of money on something like home repairs, car repairs or medical bills.

If you do not know the answer to the question “are you financially prepared for a disaster?” then it may be time that you sit down and really figure out how much financial preparedness you have and need in order to combat any emergencies or disasters that may come up over time. This is the best way to make sure that you always have enough money for a rainy day, or to tackle a period where you need more money than you are currently making.

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