First thing I want you to have mercy on yourself. You would be surprised at the amount of people that have been in your current position. Life right now is extremely challenging and with inflation at an all time high your finances can quickly get out of control. Give yourself a hug right now for even being willing to read this article. It shows that you want to fix the problem. Now let us get to it!
Step 1: – You need to contact your financial institution and explain the situation.
Some banks actually provide waiver of principal payments throughout the life of a loan. At RBC for example with your mortgage facility you are allowed twice a year, every six months, a waiver on your principal payment. So engage your Bank to see if anything is available for you at this time. Remember having a bank that supports your financial development is important. If you cannot speak with your loans officer or get in contact with anyone in your Bank – its time to change your bank!
Even if your Bank does not waivers you still need to speak with them to explain the situation. Ask them if there is anything available for you at this time to restructure your facility. Your Bank should never be the person calling you for a loan payment. This is your commitment. By reaching out first you show how committed you are to your responsibility.
Step 2:- Take a paper and write down ALL your commitments
When managing your finances you need to have a clear line between Needs & Wants. Needs are things that people require to survive. Food, water, clothing, and shelter are all needs. If a human body does not have those things, the body cannot function and will die. Wants are things that a person would like to have but are not needed for survival.
I am sorry but doing your hair, nails, facials and dining out are all needs. Right now see your finances as needing to see a doctor when you are not well. There is clearly an issue with how you spend your money and it needs to be fixed quickly before it snow balls into real issues. The quicker you get this problem under control the better for you.
Step 3:- Comparing your Needs to your take home salary
If after making the above list your “Needs total figure” is more than your take home salary then we have an issue. You need to get some assistance for any of the below:-
- A full restructuring of your debt commitments
- Additional income i.e. a side hustle
- Change of job to get a higher salary
- Liquidation of an existing asset tied to a loan replaced by a cheaper option
This is always the hard part because sometimes you cannot do this process on your own. When you are physically sick you know to go to a doctor however a lot of us are financial sick and have no idea where to turn to for help. The issue with this is financial stress can lead to physically illness. Its a hard pill to manage for a lot of people out there and if not controlled quickly can become a huge problem.
You need to handle the problem before your mortgage goes into default and you lose your family’s home. You need to control the problem before your credit report is negatively impacted. You need to control the problem before your car is repossessed. I received an email where a lady explained that her car was repossessed at her work place. It meant now that everyone in her office knew she was having financial problems and she did not have a way to get home. She was extremely embarrassed and did not know how she was going to face them the next day in the office! Unfortunately this is what occurs if we do not get this problem under control and fast.
Message me for further information on how to properly manage this step 3 process. Just because you are having financial difficulty does not mean a Bank would not assist. You have a better chance of getting assistance if you handle it early. Unfortunately as the arrears pile up on your loan your options will start to reduce.
If you have any questions please do not hesitate to contact us at support@afbconsultingservices.com