MISSISSIPPI STATE -- Financial survival after sudden drops in incomes from job loss, medical expenses, death of a spouse or divorce will depend largely on a person's budgeting ability.

"A reduction or loss of income usually forces a family to alter spending patterns," said Dr. Beverly Howell, family economics and management specialist with Mississippi State University's Extension Service. "There are no hard-and-fast rules for family spending because individual needs, goals and circumstances vary. To minimize problems, family members should communicate openly to develop and follow a spending plan."

Begin by listing all the income available to the family. Look at all assets that could be sold for quick cash if necessary. Separate fixed expenses or debts with flexible expenses. Reviewing the family check register or canceled receipts is the best way to get a handle on expenses.

"Since some expenses are more important than others, prioritize bills and pay the most important ones first," Howell said. "If there are some bills that cannot be paid when they are due, contact the creditor before the bill is due and explain your financial situation and negotiate new repaying terms."

Howell said most lending institutions are willing to work with homeowners with mortgage payment difficulties.

"If you can't make full payments, act immediately before the first payment is missed," she said. "Call the mortgage holder and propose a plan, such as a deferred or partial payment plan."

Homeowners may want to consider extending the loan, refinancing or voluntary surrender of the deed in lieu of foreclosure.

Whenever a person cannot meet obligations for expenses such as utilities, telephones, insurance or others, the creditor should be contacted before the bill is due. After explaining the financial situation, propose an alternative repaying plan. If that is not satisfactory, request suggestions from the company.

During low-income times, evaluate utility and telephone usage to minimize the impact on the family pocketbook. Also re-evaluate the size and type of insurance policy to determine its feasibility during financial difficulties.