Home

Financial emergencies have been there and will be for the longest time. Therefore, you must prepare for the unseen and do so diligently. But how do you do this? Here are five ways to prepare for a financial emergency.

1. Insurance

The goal of insurance is to pool resources and help those in need when in need. In addition, getting insurance for the same is a wise way to prepare for financial emergencies.

Most insurances have medical and pension plans you can sign up for. However, an unexpected medical bill can have significant damage to your finances. That is why it is prudent to have one, two, or even more insurance policies.

The best insurances have the highest premiums. While it may look like a waste of money, it will help you when your time of financial emergency comes.

2. Establish an emergency fund

This is another crucial step towards proper preparation for a financial emergency. Establishing this fund will save you from trauma during your needy times. An emergency fund is simply caution money that will be utilized during times of need.

There’s no upper limit to how much you can save for an emergency. But the lower limit is at least six months’ expenses. That means you set aside six to nine months’ monthly expenditure. That way, assuming you’re retrenched, you have about six to nine months to look for another job.

An emergency fund should be separate from savings. That means, in the event, you utilize the fund, you still have enough in your savings account to continue moving towards financial freedom.

3. Sort your finances

One of the best ways to prepare financially is to put your house in order. If you have a debt now, strive to reduce or finish the debt. Work hard to ensure you do not have unnecessary unpaid debts.

Imagine losing your job while having debts at the same time. It can be catastrophic for you. However, it would be easier to handle the situation without the obligation.

Besides, ensure you have a budget and strictly adhere to that. This will help you save enough and lead a sober financial life.

4. Proper planning

Most of us plan with a perfect future in mind. We do that, forgetting that life is full of uncertainties and anything can happen along the way. Those who have had nightmare experiences in the past know the importance of making financial projections with the realities of life in mind.

There’s no financial preparation complete without a budget. However, this financial tool helps significantly as it gives your economic life direction. It is a focus tool and one that leads you in decision-making.

Financial decisions are not the easiest to make. We do them unconsciously, and sometimes that may hurt us. For instance, the decision to spend a certain amount on a particular food and not on the other can have a long-term effect on your financial life.

One may ask what importance financial planning has on emergencies. Well, planning puts you in a position to restore financial stability even after suffering a significant setback. This is because you have plans in place of how to maneuver.

5. Build your credit score

Credit ratings determine your credit limits. The better the score, the higher the amount of credit you can get. That is why you need to build a good rating.

When the emergency strikes and you have no other source, a loan would be your last resort. The higher the limit, the more the amount you stand to get. That will save you during that time of need. After recovery, you can settle your debt after getting out of the financial emergency.

Some ways to build your credit score include taking and paying loans on time. Besides, you should avoid many lenders because every credit rating check affects your overall score.

With the financial situation getting tighter every other day worldwide, debts may become almost impossible. However, with a good plan, commitments, and self-discipline, you can clear your debts.

Student loans, credit debt, mortgages, personal and home equity loans- name them all; are some of the commonest debts tying people today. Sadly, some people cannot pay off their existing debts and keep adding more, making them slaves to their lenders. Are you one of them? Worry not; with a good plan, commitment, and self-discipline, you can clear off all your debts, attaining financial freedom. Here are some easy but manageable tips that will help you pay off debts.

1. Work With a Budget

One of the commonest reasons people end up being debtors, even for unnecessary debts, is impulse spending. This refers to the tendency of buying everything and anything that impresses you, even if it’s not in the budget. Although this practice can be deeply ingrained, you can be free of it. The easiest way to do this is working with a budget; sit down toward the end of the month and write down what you have versus what you need. Plan your income and compare it with your expenses, and by tracking the two, you will have enough to pay off any existing debts and avoid new ones. If you find it challenging to make your budget, try a budgeting app and make things easier for yourself.

2. Clear Off the Most Expensive of Debts

In some cases, you may have more than one debt. For such situations, clearing the most expensive debts is the best way to go. Check all your credit cards and sort them in descending order, so you know the most expensive and the cheapest debts. As you pay the largest debt, you boost your annual repayment, ultimately increasing your credit points.

3. Seek Professional Help

Paying off debts is not about how much you earn but your spending habits. Interestingly, you might come across people with the largest-figure earnings, yet they have mired in debts their whole lives. Contrastingly, you will also come across people who barely earn anything, but because of good spending habits, are living a debt-free life. So then, streamlining your spending practices goes a long way to help you avoid debts and clear the existing ones. Besides, professional organizations like credit.org provide professional advice to make whoever needs it financially literate. Such bodies can help you streamline your expenditure and pay off your debts.

4. Get the Entire Family Involved

One common financial crisis in families is pulling the burden by yourself. Simply put, it’s a situation whereby one family member is involved in all the financial matters, and the rest only spend. This is dangerous, and if you are going to clear the debts you have fast, you have to involve all the members. It really doesn’t matter how much savings you have if your family members keep spending and borrowing without regard for your debt repayment strategy. In contrast, bringing the entire family on board and discussing everything about your debts helps them ensure self-discipline in their spending and even come through to help you.

5. Go Higher Than the Minimum Payment

Although every credit card has a minimum amount one should pay every month, it doesn’t mean that you can pay more than that figure. Therefore, one strategy that people employ to clear debts is going above the minimum every month. Remember, the longer you take to repay your debts, the more expensive it gets. Consequently, topping up your payment and going above the minimum every month helps you pay less in the long run.

6. Stop Credit-spending 

Purchasing stuff using credit cards may come with incentives from time to time, which is why credits are on the rise. Therefore, one effective way to pay off debts and avoid new ones is to avoid using credit cards. Instead, use cash even if you will not get incentives. However, if you have to purchase items with credit cards, ensure your financial status is in control since every time you buy something, your debts keep accumulating. 

7. Renegotiate Your Credit Card Debts

Like any other flexible business, credit card debts are negotiable. What’s more, just a phone call can take you far when it comes to renegotiating your credit card debts, otherwise called credit settlement. Start by reviewing your credit and payment history, and with everything on point, call the lenders and ask for a lower interest. If that’s not possible, ask for a waiver, and if that too fails, pay the full amount once, and you won’t have spent so much still. In fact, paying a lump sum amount has proven to be cheaper than the recurring monthly installments.

8. Employ a Debt Repayment App

If you know your debt details, including the outstanding debt, the stipulated repayment period, the rates you are charged, you can pay off your debts easily. It even gets better if you have information about the offers your lenders have if you follow a particular repayment plan, an advantage a debt repayment will offer you. Remember, you download the app once, but use it for as long as you want to get assistance repaying your debts.

9. Take Advantage of Deals

Deals are some of the greatest economic saviors you can have around. Please take advantage of them and cut down your expenses to save extra pence to settle your debts. For instance, do your shopping stores offer deals at particular times, say mid and end the month? Time these deals and reduce your spending. 

10. Diversify Your Income

Inflation is real, and currencies keep losing their value. Yet, the economic situation keeps getting tighter every other day, and you have to spend more on commodities. The best way to meet your financial needs amidst all this is to diversify your income. If you depended on one job, you could consider working for two or more jobs or taking a part-time job. Interestingly, you may never know the value of the $50 you earn from extra income.

Conclusion

Debts are becoming almost impossible as living standards become expensive every day. However, if you are committed to paying debts, are well-disciplined, and have a debt repayment strategy, you can settle your debts. Some ways of doing so include having a budget, taking advantage of deals, paying more than the minimum credit amount every month, involving the entire family in financial decisions, and paying the most expensive debts fast to boost your credit points.

Money lending is part of consumer credit market in Singapore. It is just used to a small extent by the people looking for consumer loans. It is a legal business which is supervised under two main governmental acts: The Moneylenders Act 2008 and the Moneylenders Rules 2009. These rules and regulations of money lending business help in providing a framework for balancing the rights and interests of the people who are seeking for lending money.

Charges and fees which the money lender Singapore companies demand vary accordingly. For providing uniformity in the market, the government of Singapore has adopted stricter regulations on October 1, 2015. These regulations are set of rules which the government of Singapore has strictly applied on lenders as well as borrowers. Some of these are:

• For administrative fee, moneylenders can charge up to 10%
• They can only charge now maximum of 4% nominal interest per month
• Penalty for late interest is fixed to 4% per month
• Penalty for late fees is restricted to $60 per month
• Moneylenders can charge no additional fees from the consumers

 

Money lending limitations for consumers

Money lending in Singapore particularly depends upon the annual income of the borrower. There are many firms which provide the loan money on the minimum income of $500 per month. The limit of money lent usually depends upon the salary of the borrower or some multiple of it. If you are seeking for secured loans, you can easily obtain the loan in any amount, but if you are seeking for unsecured loans, you can get loan according to some set of rules. These are:

• If your annual income is less than $20,000, you can get a loan up to $3,000.
• If your annual income is $20,000 or more but less than $30,000 you can get a loan up to your 2 month’s income.
• If your annual income is more than $30,000 but less than $120,000, you can get loan up to 4 month’s income.
• If your annual income is $120,000, then you apply to get a loan of any amount.

 

Penalties and charges charged by moneylenders in Singapore

Singapore government has fixed charges for various loans contracted between 1 June 2012 and 30 September 2015. There are only six types of charges on these loans:

• Every time on the late payment you will have to pay the repayment of principal or interest.
• Every time changes have been made to the contract as per your request.
• Every time your cheque got dishonoured.
• Every time your GIRO payment to the lender gets failed.
• Every time you terminate the contract of your loan.
• For each and every legal cost made during the recovery of the money by the money lender.

The government of Singapore also has some permitted some additional charges after 1st October 2015 are:

• For each late payment, you have to pay a late fee not more than $60.
• A fee of 10% of the principal at the time of loan allocation.

Moneylender does all the legal costs for the successful settlement of the loan.