No matter how careful you are with personal finance, it’s possible to still end up in a cash crunch. This usually happens when a person loses their job or go out of business, or in case there is a medical emergency that has given rise to more expenses than they can bear. The question is, how do you do deal with problems like these.
The following are the steps that you can take to deal with a sudden financial crisis:
1. Taking Charge
The first step to solving a problem is acknowledging it first. When you are stressed out, you may want to simply turn a blind eye to the problem and procrastinate what you need to do. However, the more you delay, the more serious the situation can get. This is the same reason why so many people have poor CIBIL score. They delay their credit card payments and EMIs which eventually damage their score and they realize their mistake when they learn how tough it is to get a personal loan for CIBIL defaulter.
2. Control Your Expenses
It’s only sensible to reduce your expenses when you are facing a financial crisis. After all, you want to save as much money as possible especially if you are already repaying personal loans, credit card debt, etc.
One of the most effective things you can do to get a hold of your expenses is to separate your necessities from luxuries. Things like eating out at restaurants and snack bars, watching movies in theaters, and buying new clothes even if you already have a lavish wardrobe are luxuries. However, groceries, fees for the school/college of your child, etc. are necessities.
3. Put Off Expenses That You Can
You don’t want to buy new things when you need money the most. So, try to use the resources that you already have. For instance, if you had been meaning to get a new car, then save it for later and use public transportation until the circumstances improve. Similarly, if your house needs renovation, then it can wait for a few weeks or months so that you have enough savings. However, make sure that you don’t take personal loans or max out your credit cards to fund things that can be dealt with later.
4. Create a Plan and Act Immediately
Now that you have taken care of all your financial leakages, it’s time to devise a strategy to get back on track as soon as possible.
If you are facing a financial crisis due to job loss, then you can explore opportunities on the Internet. For instance, if you have any skill or talent, you can use it to earn a decent income online until you get a real job. If you are good at writing, then you can do blogging or try to get freelancing gigs. You can even do odd jobs by checking local classified websites.
If your financial crisis due to a massive debt, then you can consider debt accumulation in which all your loans and credit card debt are merged together so that have just one big loan that’s easier to repay. Similarly, if your credit card debt has increased a lot and the interest rate is high, then you can transfer your credit card balance to another credit card (usually issued by a different bank) that offers better repayment terms and lower interest rate.
5. Monitor Your CIBIL Report
A financial crisis is stressful enough, especially if you have a family that depends on you. However, you don’t want to harm your credit as well. This is because your options are automatically limited when your CIBIL score is poor.
It can be a huge challenge to get a personal loan for CIBIL defaulter which means your worries will only increase. So, while you work on getting back on your feet, you want to track your credit score as well. If you have borrowed a loan, then make sure you pay the EMIs on time in spite of your financial situation. Also, don’t use more than 30% of the credit on your credit cards as that’s bad for CIBIL too.