No one wants to live paycheck to paycheck and this is a very stressful way to live. It definitely feels like you are hanging on a thin thread all the time. You can never be at peace because you are always questioning your capacity to buy the most basic necessities, such as food.

This is the very reason budgeting and general financial literacy needs to be taught in schools and even at home. Everyone, including youngsters who get allowance from their parents, need to know how to plan out and regulate their spending.

Like any other plans, the number one enemy of a well-thought out budgeting goal is the unforeseen events that we more commonly refer to as emergencies. It’s a good thing there are habits that you can develop to keep yourself afloat, and generally unscathed, even if emergencies pop up like weeds in your garden.

Save

Truth be told, saving money should be a regular habit of most working adults. Saving money should not be an afterthought. Everyone should acknowledge that in order for savings to really have an impact, a savings plan should be included in your financial goals from the beginning. It shouldn’t be: “This is all I have left out of my paycheck so this is all I will deposit in my savings account.” It should be: “I earn $5,000 dollars a month, and $250 of this automatically goes to savings!” Of course, the amount will vary depending on a person’s income and expenses, but the point is clear: save before you start spending. Every person who wants to be financially independent should learn how to live below their income.

Get relevant insurance.

Emergencies like health issues, a car breaking down or being in a car accident are unfortunate events, but occurrences that you need to be able to navigate. You should plan ahead, knowing that these types of emergencies can happen at any time.

The good thing is you can purchase insurance coverage for such unfortunate incidents. For a premium, you will be able to obtain insurance that will spare your savings. However, collecting on insurance claims can be tricky at times. If your insurance company is delaying or denying claims, you may need to hire an experienced legal professional who can provide reliable help dealing with insurance companies.

Work for fun (and cash!)

If you have time to spare during weekends or after you’re done with your day job, you can do something that you love, like baking, carpentry or other hobbies. In addition to these being a form of recreation, they can also be another source of income. For example, sell the cupcakes that you baked or the chairs and small tables that you refinished. Even if you sell only to friends, it’s still money that can be used to increase your savings or save up for something you really want.

Being prepared is simply the best way to overcome challenges. Yes, there are emergencies, but at least financially, you can be prepared for the worst. So drop that defeatist attitude and start building good money habits, especially the ones shared here.

Sometimes things can happen that put you behind on a few payments. Then it can all snowball quickly. What do you do when your mortgage is behind? Some homeowners opt to apply for a home equity line of credit or equity loan.

Standard home equity loans offer a large lump sum for the entire amount you are borrowing against while HELOCs allow you to borrow on your home equity at different times and in varying amounts, as you need it. Whichever method you choose, the qualifications for both are similar.

• The equity in your home must be at least 15-20% of its value at the time of appraisal. This guarantees the lender of collateral in the event you are unable to pay back the loan. If you default, the lender can put a lien on your home to get their money back.
• You need a debt-to-income ratio of 43%, but 50% is preferred. The higher your debt-to-income ratio is, the better because it means that you are making more money than you owe, in general, and you are considered a lower repayment risk.
• You should have a credit score of 620 or higher. Lenders love high credit scores because it means you usually meet your obligations.
• You need a strong history of paying your bills on time. Even if you have fallen behind on your recent mortgage payments, bankers and lenders want to see that you usually make a habit of paying your bills on time. This means that they can trust you to pay back the loan in a reasonable amount of time.
• Recommendations from other lenders help build your credibility. If you go in with a 740-credit rating, you are almost guaranteed you’ll get the loan. But that depends on how well you meet the other qualifications. Provided you follow these steps and meet these requirements, you should be able to secure either a home equity loan or line of credit without too much trouble.

An Example of a HELOC

If you are still having troubling grasping the idea of a HELOC, here’s an example. In this example, we will assume you bank with Chase as your lender, and you are looking to utilize a Chase home equity line of credit If you have total home equity of $40,000 and the lender requires you to keep up to 20% of your home equity, you’d be allowed to borrow up to $20,000 or half of your loan.

Home equity lines of credit have fallen in popularity recently due to the recent surge in home ownership and increased equity. In a bad market or down times, we tend to see this increase. But when things are going well in the economy, people need the money less, and they are hesitant to borrow on a refinance agreement due to the variable interest rates of a HELOC.

In a perfect world, when things are going well for you, don’t borrow if you don’t have to! But if you need to get ahead and don’t have the cash flow you need, you can choose to apply for either a lump sum cash loan via a home equity loan or a home equity line of credit. Either option is a viable alternative to get ahead and avoid the worse scenario of defaulting on your mortgage. If you need help paying your mortgage, don’t let it go too long. Ask a financial advisor or local banker about an HELOC or home equity loan and see if you qualify. Keeping your home and your credit in good standing should be your primary goal, no matter how you have to do it.