11 MARCH, 2020

Financial crisis can induce immense stress and leave your fund bank in shackles. The negative situation can be caused by loss of employment, medical emergency or a sudden accident. It can be extremely difficult to control some unfavorable situations that cause you to go down the debt trap. If you have landed in such a situation, you are not alone. Most people suffer from financial crisis through the course of their lifetime and employ several ways to successfully deal with it.

Here is a guide that you can follow to effectively overcome the financial crisis.

Combat monthly expenses – As part of supporting your lifestyle, you do spend a given amount of money each month to fulfil your needs. Start by steadily cutting off on things that you don’t necessarily need. Take a closer look at your current budget and pick out everything that you can permanently or temporarily drop off. For example, are you paying for a magazine subscription that you rarely use? Time to cancel it.

Maximize on the non-liquid assets - Identify all the non-liquid assets that you have available. This could include a home or property that you do not use at present. It can be used to rent or lease, so you have an additional source of income. Additionally, look for any gift cards or grocery discount coupons. Using these non-cash assets wisely can significantly bring down your monthly expenses as you ease your way out through the financial crisis.

Pay off credit card bills and debt – Credit cards are great but if you have outstanding bills or unpaid debt, then the interest amount can be towering. They come with high interest charges that can eat into a major portion of your available budget. Pay off your monthly credit card bills on time and clear off the debt as soon as possible. Reducing interest payment fees will leave you with funds that can be directed towards things that are more important.

Get a personal loan – A personal loan makes for a good solution to pay off outstanding debt. They carry several benefits that include easy-disbursal, minimal documentation, long repayment tenors and much more. The interest rates on personal loans are also lower in comparison with that levied on credit cards. Thus, they can aid in settling your debt faster while you have enough time to repay the loan in EMIs.

Employing the above listed ways with the right planning will undoubtedly help you come to a winner out of your financial crisis.

Additional Read -Needs vs. wants - The difference between essential and discretionary spends, and why it matters

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.