How to deal with a financial emergency?

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How to deal with a financial emergency?

Any financial emergency is thoroughly upsetting. It can lead you into making gross financial errors, and all the panicking can take its toll on your health. However, know that such situations might not be all that serious, after all. You might have lost your job, but good planning can bail you out. There might have been an accident, or someone in the family could have gotten seriously ill, but the piling hospital bills can be met using a little assistance from a licensed moneylender. If you’re in such a situation or want to plan against one, read on to know how to deal with it.

Take stock of the emergency

Assess the situation and do not lose your composure. In order to rectify any financial mistake, you need to accept it in the first place. The reasons for your financial emergency could be a sudden fall in your income, an imprudent purchase, or a poor investment. It could also be an illness or an accident requiring costly treatment.

What expenses are your top priority?

It is true that some bills are has a higher priority than others. Gather all your bills and arrange them in decreasing order of immediate importance. You will also have to sideline certain expenses. Entertainment takes a backseat in the event of a financial emergency. The money you’re borrowing on a high-interest rate from your moneylender has to pay for rations, mortgages, house rent, and electricity bills, etc. You can cancel movie subscriptions and gym memberships for this period.

Call up your moneylender

It is no use to run away from or avoid people you owe money. In fact, the first thing you should do is call up and assure your creditors about making the payment as soon as you can. This also helps to negotiate the terms of the loan and lower the interest rate a little. If you know it in advance, it is recommended that you let your creditors know well before the emergency strikes. This is among the top tips in helping to get out of debt. The moneylender could even allow a delay in payment or programs making the payment process easy.

How to borrow more

This is not suggested in all case. However, if you can be moderate enough, credit cards with unused balance on them can be used to make payments on certain heads. The interest rate is a little high, but the terms of repayment and the approval periods are a big advantage.

Save up for emergency

Don’t wait for the emergency, instead, prepare for it in advance. There are many medical savings schemes that help Singaporeans save for medical emergencies. If you are self-employed, make sure that you are subscribed to one such saving scheme. Another place where you could deposit money as emergency funds is the Singapore Savings Bond. It offers a relatively low ROI (2.5%) but is different from an FD in that it permits monthly cash withdrawals.