Sometimes, we find ourselves on a good path. We may not be breaking any records for paying off debt or saving for the future, but we’re doing okay. Everything is chugging along. And then life happens. What does that look like? It might be a major medical event, or a car accident, or a job loss. Or a worldwide pandemic.

When things don’t go your way, don’t panic. I realize that’s easier said than done, but really – when has panicking ever helped anyone? It’s not productive, and it won’t make your problems disappear – in fact, acting rashly and out of fear will often make your problems worse. For example, cashing out your 401(k) would be a giant decision that can’t be undone, and one that you would likely regret once you’d had time to sit back and reflect.

So what IS productive? Taking a step back. Evaluating your situation. Have you lost income? Or is the issue that you have a huge expense that needs to be paid? Or that you lost all your clients overnight? As much as you can, separate your fear out of the analysis. The issue at hand is not that you’ll never make money again or that you’ll be in debt for the rest of your life – it’s that you are facing a time period of at least a few weeks without income, or a large expense that needs to be paid.

Focus on what needs to happen: What bills need to be paid? What are all of your options to do so? Is there still some income coming in? Do you have emergency savings? What sources of credit do you have available? How about friends or family? The best thing you can do is identify every possibility, and evaluate each one. That process often brings clarity. Yes, using a credit card might seem like a poor choice at first, but compared to asking your parents for money, it might suddenly seem like a reasonable short-term solution. Do whatever you have to do to buy yourself time and space to figure things out.

If the issue is a loss of income, conserve your cash, and certainly stop paying more than the minimum on any debt. You will incur more interest that way, but in that situation, cash is the best thing you can have. Once you use money to pay down a debt, that money is gone forever. Paying interest is a small price to pay to keep enough money in the bank to take care of the expenses that really need to be paid.

If just reading this is bringing all your anxiety to the surface, use that as motivation to prepare. While you are in a position of steady income and no crazy bills to pay, take steps towards establishing an emergency fund. Set up a home equity line of credit if you have equity in your house but are without a big pile of money in the bank. People who anticipate rainy days and plan for them don’t experience the same level of panic when the emergency finally happens. They might worry, but their foresight gives them some breathing room when the worst happens. Now is the perfect time to become that person.

Photo by Jose Francisco Morales on Unsplash