Financial crises can happen to anyone, and sometimes for no fault of theirs. It could be brought on by a layoff, sudden medical expense, loss of the main breadwinner, business failure, or even investments that have gone bad. If you find yourself in the middle of one, here are some pragmatic steps to help you on the road to recovery, regardless of the cause:
Accept and assess the situation
Stop blaming or wallowing in guilt; it’s time to acknowledge losses and summon the will to move on. Take stock of the actual damage. Is it a one-time setback or an ongoing one?
Assess what you owe, how much you have and how much you’ll spend regularly. Also estimate what resources can be available, including insurance claim amount and accumulated pension. If required, check can you borrow against Provident Fund or other assets if any. Often an employer, a family member or a friend may be ready to lend a helping hand, and you can get money on better terms than from formal lenders like banks.
Chart a plan out
Next up, you’ve got to re-prioritise payments due. Choose bills or dues that need to be cleared first and which ones can be deferred. Talk to your creditors if debt restructuring can be undertaken.
Involve your spouse in the discussion, look at how you can cut some costs. Plan how you will pay for your spends in the next few months. Figure out if there is a way of increasing your income, perhaps an after-work freelancing, or better re-positioning of assets.
This part, though seems obvious, is where many people falter, they quit mid-way. Be open to the idea that your original plan might not turn out to be the best; feel free to revise it and stick to what suits your current circumstances. But don’t wait, begin with a reasonably meaningful plan, correct errors without despairing, and be on it consistently.
These steps above can help anyone turn around a period of financial crisis and be back on their feet.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.