How To Manage Your Finances During A Recession?
How to manage a financial meltdown? If you can manage your own finances the world condition will revert to a stable financial standing. After my article on live out of credit i have been getting many mails to write about how to manage their own personal finances. Well despite the multitude of posts in the internet i thought i will be duplicating the information. Perhaps you will want to know how to get motivated to take control of your finances. But because of pressures from my readers i submit my opinion here about personal finances especially during a recession.
The problem with people is this : they are like the pinball in the game of roulette where they land by chance. If you are having a business or working for a company and facing debt problem think back the course of actions you have taken to end up in this position. If you have a poor memory do not be dismayed. Read on to get as much idea from this post to stay credit ‘lean’ and not credit ‘fat’. After you have read one idea try to put in practice. This post is for those who are experiencing serious personal financial meltdown. So if you are looking for quick fix please do not waste your time- try elsewhere.
By credit lean i mean you are managing well with your credit. By credit fat your are struggling or facing a problem in your credit commitment. The easy way is to surrender to the beast – declare bankruptcy. But it has its own disadvantages. The one factor can make you a consistent survivor is to withstand frustration. But to be able to live stronger against the pressure of debt, you need to enforce concrete steps to free the burden of debt. I have to reiterate that this post is not coming our of my imagination. These tips are hard learned lessons through my years of networking with people who had faced such situations and the thorns of life.
If you arrived to my blog, be rest assured that debt problem can be erased drastically if you use any of my tips below. I gaurantee your life will on the road to bliss, peace and an enriching one. The only thing you have to do is to follow the tips below with vigour and sincerity.
Do Not Worry
To worry about something is the activation of the chemicals in the brain. If you are given a sum of 1+1 the brain with ease will find an answer. But if you give your brain something like 1256478964 + 346787654 is a tough challenge. The next instance you will taking your calculator to do this. The brain has to have a pattern so that it can work with ease. If it has no solution stored it will trigger ‘worry’ chemicals and you will start worrying. In other words, the cause of worry is lack of knowledge for a probable solution.
Way back in 2003 when i became unemployed, my life was going in chaos. My house which i had repayment period for another 20 years with a monthly loan of $1000/-hard cash was on the verge of being taken back by the mortgagee. I had my family of 5 with wife and 3 kids to take care of. The only plus factor that i was having within me is that I DID NOT WORRY A BIT. In my heart i always thought that all that was happening for a reason. I wrote out a plan to resolve my issue then. Now i am still living in this home and managed to get back to track to paying back my loan. Currently i am setting a goal to buy a bigger home as property in Singapore is a long term investment.
Do not worry but start finding out what is the probable solution to pay up your debt. Talk to your bank that you are willing to pay back and really need the asset. Ask for a longer pay back period so that you can bring down the loan repayment amount. Once you have confirmed some solutions then work on getting back on track.
Separate Your Wants From Your Need
The problem of economics of limited means and unlimited wants can be re written if only we are able to see what is a need and what is a want. Not all our expenses in a month consist of need- a major portion of it are all ‘wants’. What is a need? A need can be utility charges, rental, food, transport, daily clothes, groceries and so on. But when you separate or break up the meaning of those need itemised above we find a want’ disguised as a need. Food is a need but eating out is a want. Transport is a need but having an expensive car is a want. In Singapore, the public transport is well organised and it is a need and having a simple car is a want here.
After you have sourced for a cheaper alternative for a need try to list them in columns of three: need; before;after. Write out the expenses in ‘before’ and ‘after’ column. ‘After’ is the expended amount after you have sourced for a cheaper need. At the end of the spreadsheet circle the excess amount that can be saved monthly. Use this saving to pay back your debt.
Try To Increase Your Income
Income is like a river full of water gushing downstream. The meaning of employment has changed drastically. 20 years ago when you are working for a company 10 years you are considered as a veteran or an experienced staff. But in today’s meaning if have worked for that number of years either your are ‘rotting’ in one company or your value cannot be transferable to another company. You will likely to get a ‘fishy’ look by others.
Income on the other hand is appraised yearly. A peson who earns an income after 5 years in company ‘A’ will be better of if he transfer his value to company ‘B’ after 3 years. This is because after 3 years company ‘A’ also source for cheaper labour. The rate of increase in income must not be at a slower pace than your average need. The excess can be saved and expended on your principal debt. In this manner you can bring down the monthly debt servicing amount.
Cash rich and credit poor
After you have worked out to identify between the ‘wolf’ and the ‘lamb’-want and need- ensure that you stick to the written plan. But in today’s context acquiring leverage is the way to get all those you need. If you happen to fall on to this trap again you can request for an installment from the seller without an interest. 6 months ago i got a laptop for $1,500/- at a monthly installment for $200/- without any interest. Most shops uses credit card for installment payment without interest accrued.
If you are trying to resolve your credit issue stop leveraging until you have settled all your debt.
Spend What You Must
I have the opportunity to meet the Managing Director of a pest control company. Whenever i see him he always wear a grey pants and white shirt. He looked very tidy in those matching colors. I asked him as to why he always wear the same colored attires. He told me i am the first person ever to ask him such personal question ( he meant i was a curious person). He replied that his made to order pants are all one color and from the same fabric which he chose from a tailor who has a over supply of such fabric. So he got his material at a cheaper rate. He said ’spend what you must-save what you can and spend smartly ’
Leveraging is one factor to wealth building. But too much leveraging and when it is not managed appropriately it becomes bad debt. Use the above tips and practice to get out of debt and make a path to find enrichment in your life.
