If any of your property gets repossessed, it can be a tough time financially. If you’re not careful, you may spiral into deeper financial trouble. At this time, you may find yourself constantly having to borrow from a legalised money lender in Singapore.
But there are ways to bounce back than taking out more loans. Here are three steps you can take to bounce back from a repossession.
Talk to your bank or lender
The first thing you can do is to negotiate repayment terms with your bank or lender. If your financial situation still makes it hard to repay your loans, discuss it with them. They may offer longer tenure, reduced monthly repayments, or both. This way, you can pay off your debts without stretching your finances too much.
Avoid taking legal action right away if you have not talked to your lenders yet. Legal action may cost you more, both in terms of money and effort, than negotiating. If you can come to terms with your lender, and both of you can agree on an updated loan repayment plan, you will be much better off.
Prioritise repaying your loans
Once you have talked to your bank or lender, you need to make loan repayment a financial priority. Pay down any outstanding loans as quickly as your finances will allow. This way, you can get away from debt and move on to building savings and an emergency fund.
Just avoid using up too much of your income to pay off loans. Leave enough money for you and your family to live decently onlinedemand.
Build better money habits
The next step is to build financially healthy habits. This includes budgeting, saving, and investing.
First of all, create a budget that accounts for all your income and expenses. Designate every dollar you earn into a portion of your budget. This way, you can avoid overspending and you know exactly where your money is going. Make sure to stick to your budget every time; otherwise, you may overspend and go down into debt again.
Then, get into the habit of saving. Build your emergency fund first, which constitutes at least six months of your regular income. Once you have this, build a separate savings account, and designate a fixed proportion of your monthly income as savings. For most people, ten to twenty percent of their monthly income is a good fraction to set aside as savings.
Last but not the least, invest some of your money. Some financial experts peg this at up to twenty percent of your monthly income. Put that money into proven and tested investment vehicles like the stock market, property, and small businesses. This way, you can make your money earn for you. This is the way to build wealth in the long run.
Conclusion
Repossession can be a tough time, but you can always bounce back from it. Focus on getting out of debt first, then build good financial habits after. This way, you can build wealth instead of drowning in a sea of debt.