Any unexpected change in your financial position can be quite stressful and needs to be dealt with urgently but with a calm mind if the proper solution is to be found and implemented. This can be achieved only if you have access to information about how to deal with such a situation. Financial emergencies can be brought on by almost anything, a natural calamity, unforeseen medical expenses, loss of employment, or whatever. However, the bills still have to be paid in part or in full. If bills such as, credit card bills, utility bills, rent, mortgages etc are not paid on time it won’t be long before the creditors come calling – adding to the stress.
Evaluate the situation on priority
When you find yourself in such a situation, or better still, an impending situation, take a deep breathe and sit down with a pad and pencil to evaluate the situation without wasting a second of your time. Staying cool with a thousand things running through your mind may be difficult, but panicking will not solve anything either. You need to stay calm.
At the outset, you need to determine the cause of the problem in order to find a solution. Did your income suddenly decrease or did the expenditure suddenly increase? Were you affected by a natural disaster or was there some other emergency that threw your budget out of gear? Did you have a budget in the first place? Getting to the root of the problem is important because you don’t want a short-term solution. Your solution has got to be a long-term one. So, getting to the cause of the problem and nipping it in the bud is the right thing to do.
Cut down on expenses
Make a list of all the expenses you have incurred since the problem began manifesting itself. Make a list on paper then determine what are the monthly expenses you just cannot do without such as, utility bills, mortgages, fuel, school fee, rations and groceries and cut out the frivolous expenses, at least till the problem is solved.
Prioritize your expenditure. Think about it; is it worth losing your house to foreclosure just to pay the cable or the internet company? Do you have to take that vacation just because the joneses are going? Try to cut back on as much as you can and eliminate the useless expenses completely. Take care of the pennies and the dollars will take care of themselves.
Talk to your lenders
If part of the problem was caused by high credit card bills, outstanding mortgage payments, utility bills, or medical expenses it will help a great deal to call your lenders. You will be surprised how willing they are to help you out. It is always in their best interest to help their customers caught in a debt trap.
It is sad to see that people wait till they are caught in a vicious debt trap before contacting their lenders, but by then they will not be willing to help. Lenders, in the early stages of a financial crisis, will offer various solutions such as; lower interest rates, extended repayment tenures and some will even offer taking over all outstanding debt under one account and offer you an extended time to repay it at a lower rate of interest so you have money left over to take care of the other household expenses.
Lenders may even suggest you take out personal cash loans with lower interest rates to consolidate your debt, as this would dramatically reduce the hassle of dealing with multiple debts with varying interest rates.
Contact a professional
If talking to your lenders does not suit you, you may want to consider contacting a debt management service or professional. They have access to funds that you could use to repay all outstanding debt and will help you manage your finances efficiently. In no time you will be free from debt and living a stress free life again.