Personal Finance

What to do When You Have Financial Problems

If you are in a financial hole, it is important to avoid stupid things not to dig deeper.

Take a microloan

You may find the idea of ​​taking a small loan from a microfinance organization tempting. Such companies know how to advertise themselves and really give money to almost everyone. And it seems that this is exactly what you need: to receive a small amount without confirming your ability to pay.

Such a loan must be given quickly and on time. Primarily because of the high interest rates.

The Central Bank estimates that by the end of 2017, the average cost of a consumer loan of up to 30 thousand rubles was 614.6% Review of Key Indicators of Microfinance Institutions for Q3 2017annual. At the same time, from the beginning of October 2016 to the beginning of October 2017, the debt on payday loans increased by 36.4%. And this speaks volumes about the fact that it is easy to get into malicious defaulters.

Also, microloans are the easiest way to call collectors to your doorstep. Companies willingly sell them debts as soon as the delay exceeds 90 days: further microcredit does not profit the real owners of money.

Stop paying utility bills.

When there is no money, it is logical to look for which regular payments you can refuse. Utilities are often on this list, but you shouldn't.

Read also: 5 Timeless Financial Tips from Greek and Roman Philosophers.

If it seems to you that the resource supplying organizations have no leverage to influence you, this is not the case. For the second month of non-payment, you will be charged a penalty. In two months, you risk being left without hot water, gas, electricity, and sewerage. Finally, as an extreme but possible measure, you may be evicted. So it’s better not to take this “saving” method seriously.

Image source: Reproduction/Internet

It is irrational to use a credit card.

A credit card provides an excellent opportunity to "snatch" a small amount before payday. But this method is only suitable for people with a regular income at a normal level. To get out of the financial hole, this option will not be salutary.

For instance, you receive 5,000 rubles, of which you spend 3,000 on food, a thousand - on a shared apartment, and a thousand - on travel, cleaning supplies, and other necessities. If you borrowed 500 rubles from the bank this month, you would have nothing to return them from next month. On the other hand, if you pay with a credit card for a 50 ruble item, then it will be easier to give them back.

You can use the card, but only after careful calculations.

You should definitely not create situations in which you will not have time to pay off the debt before the grace period expires. Until this moment, you will only need to return what you took. After that, the bank will begin to charge interest, and the financial burden will increase.

Take household loans for unnecessary things.

It seems that the previous points should have already suggested that loans for those who have financial problems are evil. It is worth consolidating this idea in one more aspect.

Household loans are presented as an opportunity to buy what you cannot afford. The only trick is that you still can't afford it.

You buy a thing that is too expensive for you at an even higher price - including interest.

Of course, it is a master's business to decide whether to spend money on a not very useful purchase, removing it from important expenditure items. But such a strategy cannot be called reasonable. It is hardly worth expecting that your financial situation will improve with this approach. You won't be able to significantly worsen it, at best.

Get involved in dubious financial adventures.

When there is no money, many start looking for easy ways to make money and literally invest the last in lotteries, gambling, and pyramids.

Also read: How to Be More Organized with Money

If you don't see the Hollywood letters on the nearby hill right now and the director isn't yelling at you, don't hope for sudden wealth. The more dubious the financial gamble, the more money it will pull out of you.

Stop keeping a budget.

When there is absolutely not enough money, it appears that counting it is unnecessary. After all, it is clear where what amounts are spent, you still cannot buy too much.

But it is in this situation that it is vital to keep track of expenses and forecast expenses, especially large ones. Yes, the information in your spreadsheets or notebooks will not be optimistic. But precisely, and not approximately, to know the real state of affairs does not hurt at all.

Adapted and translated by The Cop Cart Staff

Sources: Life hacker