A 4-pronged strategy to see through the crisis unscathed
KeyPanic is a natural reaction to a crisis. The financial turmoil ripping through markets around the world has driven a frenzied response. People are borrowing mindlessly and building on existing credit with juvenile impulse, thus leaving their credit profile in tatters. Savings are being used up since a compromise with one’s lifestyle seems ‘preposterous’. Dealing with a financial crisis this way could lead you to doomsday in no time. So, how do you really see through it without receiving a serious dent to your high perch? Adopt this four-pronged strategy.
A no-brainer and a foolproof method to evade bankruptcy. Saving up for the rainy day should begin not when crisis strikes. You need to create a habit of saving. Regardless of how much you earn, ensure you set a fixed amount apart every month to build your savings. It comes in handy when cash and credit are hard to come by.
Panic creates desperation, which in turn promotes an insensitive approach to debt management. Believe it or not, a financial crisis is the best time to cut down your debt to a manageable size. You’ve switched to the savings mode, which essentially means you can use a part of the surplus to repay existing loans. Credit is getting costlier, and the last thing you want is to let the cash outflow increase, with your income remaining the same.
Shop for lesser
When the market is witnessing a slump and pay cuts are imminent, you most certainly do not want to be caught on the wrong foot while budgeting your expenses. If you continue spending as earlier, the day isn’t far when your expenditure exceeds your income. The best way to be prepared for such an eventuality is to lower your lifestyle. If you’re shopping for an item, and there are two options available, picking up the less expensive one would help you save money. It doesn’t hurt to go easy on your brand preferences, since you can always switch back when the situation improves.
Additionally, there are ways to cut down on your bills. Most of us use the conventional method to make our monthly payments. These methods are found to be more expensive than online deals. If you pay your bills through direct debit, you can realize significant savings in money.
Keep an eye on your credit profile
A financial crisis is the time when most people ignore their credit profile and resort to reckless borrowing, defaulting, etc. It is essential that you keep a watch on your credit profile, even though this may be the toughest choice to make when a juicy loan is on offer. Pay your bills on time, borrow only when it is absolutely necessary, and you will see through the slump with your credit score intact.