If you wondered briefly if you are the only person experiencing short-term financial woes, there are thousands of others who are in the same boat. Money troubles plague most adults at least once in their lifetime.
Losing a job, medical emergencies, and family crises are just some of the challenges people could face requiring an immediate solution. Here are practical steps to follow that will help you emerge on the other side of a monetary quagmire:
Seek immediate relief
Crises tend to need prompt action, and a financial one is no different. When one creeps up on you unexpectedly, explore options like online short-term loans for immediate access to the necessary funds. A payday loan is ideal for a relatively small amount, and you will have three months at most to repay it, depending on the terms offered by the lender. For larger amounts, seek a personal loan as these products have a longer repayment period.
Going into debt means interest charges over and above the principal loan amount, and you need to stay on top of repayments to avoid harming your credit score. This means fitting the instalment amount into your monthly budget.
To reduce the amount payable, research online lenders to find the best deal as they may offer different interest rates. Although it might be tempting to borrow a little extra than you need to cover other expenses, keep your loan amount to a minimum.
Become aware of your spending
You can finance debt repayments by examining your spending patterns to find ways to save money. For example, if you buy expensive coffee on your way to work each day, calculate how much money could be saved if you took your own. How freely do you spend money at the grocery store by deviating from a set list of what is needed and a budget of how much money is available?
Once you start tracking your spending habits, it is easy to find ways to cut costs and ensure you have money to repay your debts. Go as far as examining your use of electricity and gas to find ways to reduce it and save.
Set a budget and spending plan
When drawing up a budget, divide your expenses into two categories: essentials and luxuries. Essentials are those things you need for survival, while luxuries are extras that make life easier but will not compromise your ability to continue living. Therefore, paying for a roof over your head, food, electricity, and transportation for work are essentials.
Outstanding debt also fits into this category as not paying it harms your credit score, which prevents you from securing other loans in the future. Putting money aside to save for future emergencies should also be regarded as a financial priority.
Things like fancy mobiles, live streaming television services, eating out, holidays, and expensive gifts do not fit into the essentials category. They can only feature in your budget once you have accommodated necessities.
Source extra income
You might have something to sell to help cover the costs of a debt or put into a savings account. Examples include that car you know will never be rebuilt, the tools no one is likely to use again, or jewellery that you could do without. It might be challenging to part with some items that you have developed a sentimental attachment to, but as needs must, according to the adage.
Ask your employer if you could work extra shifts to make more money or start a small business on the side to create a new revenue stream. For example, you could design websites for small businesses after hours if you have that expertise.
Look at your skills and see how they can be applied in forming a side hustle that lets you earn more cash. Alternatively, use your passion for hobbies, such as knitting, and create products to sell. There are ways to make the extra money needed. Yours is to find and exploit them.
Not everyone is a finance guru, and you would not be the first person to struggle to manage their budget and debt commitments. Many banks and lenders have employees who are trained to assist clients who need financial advice.
Once you supply them with the relevant information, they can examine your options and provide professional advice. An adviser can also ensure you have a savings account that offers a good interest rate to help your savings grow.
If it feels like you are drowning in debt, one option might be consolidating your debt into a single loan to be repaid over a set period. This will help save your credit rating, as you use the money from the consolidation loan to pay off all outstanding debts. Thereafter, you repay that single loan for its duration. A bank employee can help you with the necessary paperwork to secure a consolidation loan at a competitive interest rate.