Sandeep and Meena have been married for 3 years now. Sandeep, an IT specialist runs his own consultancy while Meena has been working as a coordinator with a BPO. Both of them have been making decent money and as is the case in few youth have been splurging on credit cards. Sandeep had even taken Axis bank personal loan to fund the overseas holiday. In the recent past, Meena’s younger brother got married and both of them spent major part of their savings on the marriage. In a rather unfortunate event, Sandeep’s mother was to be hospitalized. In the absence of a medical cover, the cost was to be borne directly. The situation forced them to obtain another personal loan and this was time for Meena to apply for one.
With no saving, a home loan, two personal loans and maxed out credit cards, Sandeep and Meena found themselves on the verge of defaulting. What should they do now to be able to come out of the deep financial mess?
Accept and be honest Check your credit report
There are many who continue to live in the state of denial. Rather than accepting the situation and focusing on ways to improve it as at today, people plan to repay from the future incremental earning. A large order that may be expected, a new job or internal promotion etc. are subject to various factors and may or may not happen.
The first thing the couple should do is to accept and be honest about the situation. Acceptance of a situation will give the couple the courage to take steps with austerity and deal with the situation in a better frame of mind.
Differentiate between needs and wants
This is the big one and will help the couple to actually steer out of the situation. There is a thin line between what we need and what we want. This line needs to be demarked clearly. Especially when the couple is trying to come out of the situation. What we need to survive is food, clothes, shelter and of course entertainment. Measures like treating the kids to their favorite pasta or burger at home; switching to playing games together (indoor or outdoor) rather than frequenting for a movie; moving to outdoor exercising rather than paying for expensive gym memberships etc. are only a indicative steps from a host of other inexpensive steps that the couple could take to save funds.
Postpone purchase of an expensive item by at least a day or two and if you still feel the need then buy it.
Work as a team
As the saying goes, two minds work better than one the couple needs to work as a team. Be open to share the views and points with each other without holding back and be equally open to the suggestions and other person’s thoughts.
Set realistic goals
Setting realistic goals is of high importance. One needs to decide on the span that would be required to repay the dues keeping in mind that the couple cannot stop living and resort to a frugal life. While expenses need to be curtailed, do not deprive yourselves from the fun.
Workout ways to generate additional money
Brainstorm together on ways and means to generate that additional 1000 rupees. The power of the small amount is quite large when it comes to cumulative effect over the finances. It turns out to be 12,000 a year and can take care of all your telecom expenses. So do not hesitate or think twice about any way some additional money can come in.
Last but not the least, the couple need perseverance to be successful. Please realize that this is a temporary situation and will end over a period of time. Giving up once you have started on the path can be devastating and severely impact the credit profile. One needs to be aware of the fact that if the credit score dips, the options of having access to main stream credit also dips and one would be left with little options but to apply for loans for bad credit, if need arises.
Finally, when the couple has paid off the liabilities, they must treat themselves financially. A small outstation trip or any other such spend would help them recoup and celebrate the end of difficult time.
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