A sudden layoff occurred at Singapore Press Holdings. 130 workers lost their jobs in a company measure to short staff the workforce. A significant number of this retrenchments occurred on the same day causing a rise in anxiety and confusion among the workers on the prospect of not having a job at all In an instance where such a situation can happen to you, there are things that you should evidently avoid that lead to being in a state of despondency. Anxiety can lead to the development of depression and other psychological and psychiatric problems. To avoid the existence of more financial and health problems in the future, you should by all means avoid making some of the common financial mistakes that occur prior to retrenchment. Here we will analyze some of this financial mistakes that occur, it is important that you ensure you avoid them.
Liquidating funds at a very fast pace.
One of the greatest financial mistakes that is commonly observed is immediate or progressive liquidation of assets. Most of the retrenched people emotionally react. They immediately or progressively begin to convert their assets into cash. In some exaggerated instances, some people move to miniaturize their home by selling a part of it. People do this in a rush. They may to an extent be very consenting to accept bids/offers that are far much below the valuation of the home. This situations occurs mainly due to the perceived threat of being financially bankrupt and the urgent need for cash in their pockets. There is selling of unit trust even without regarding the losses. They may visit money lender and borrow cash from them (money lenders have high interest rates and may require that you sell some of your wealth to pay them back). One may even withdraw all the funds from fixed deposits hence giving up on the ever increasing interests. Premature selling of endowment polices also occurs -yet this can lead to loosing of even more money.
Speaking to a financial planner can be very useful to avoid such drastic and less thought of actions. For you to sell your assets, you must do it in a well-planned and organized manner. For instance, one might choose to convert blue chip stocks to cash for that can be applicable for the first month of the expenses. Later on you can move on sell unit trusts for use in the second month. Then later on liquidate savings that are in form of bonds. This can be done step by step to avoid the occurrence of bankruptcy.
There is definitely no need for a rush since this can lead to extreme loses at the end of the day. You might end up selling your wealth at a lower price than its net worth/market value. Were it that you find a job after exhausting your savings, there is a high probability that your retirement funds affected to a significant extent.
Use all the savings that you have
In the occasion that you are faced with a financial crisis during retrenchment (for any reason) don’t come to the conclusion that “all has needed” and spend all you have because “nothing matters anyway”. It is very risky to have less money. The first thing that you should do is to store the little money that you currently possess safely. Avoid debts at any costs. Relying on credits will create a greater problem due to accumulation of high-interest debts. In the situation when you cannot clear your debts, it is significant to avoid accumulating any debts.
Taking a long time to negotiate payments of Loans
Find out how capable you are to repay your monthly loans and get in touch with your counselling service. Banks will surely help to restructure your payment structure if you are able to contact them early in advance. This will help protect your credit score from experiencing damage. Procrastination is the thief of time, therefore, the more you ignore your current state the more the situation will worsen. It is important to be very active and ensure you contact your bank to solve the loan repayment issues. You might be in a situation of increased debt before you get a new job.
Letting your insurance lapse
You might come to a conclusion that you do not need insurance since your financial situation is wanting. On the contrary this is a big mistake! When your financial situation is in trial, an insurance is a safe haven you cannot afford to lose. The lesser your savings, the more the need for insurance. It is import that you contact your financial and come to a conclusion on the most favorable back-up plan. You may switch to a cheaper and more affordable back-up plan or in some case you may receive a premium holiday.
In any case, you need to ensure that you insurance is a constant factor in your current financial pitfall. The lapsing of your insurance can become a long lasting thorn that may in the progress of time lead to parlance of your situation.
Moving swiftly to take a reverse mortgage or asset-backed Loan
Yielding to the urge to take a reverse-mortgage-backed loan can be tempting. Being in possession of a private property for example, may be a hallmark for one to borrow the mortgage reverse loan against. This is because the loan has a low interest rate and it can last for several years.
For some people who have gold or stock portfolios, they may use these wealth to borrow a loans against. It is very important that you calculate your savings and see if they can last you for a relevant amount of time before borrowing hefty loans. In a situation whereby your loans can take you for a significant amount of time such as six or more months, it is highly probable that you will have found another job. The accrued debt (in case you take the loan) could be so high that you would end up making you curse and hate yourself for taking such a loan.
It is very significant, therefore, that you contact your financial adviser or wealth manager about the amount of loan that should be taken. Because you are allowed to borrow fifty percent of the value of your home (in the case of a mortgage reverse loan) does not mean it is necessary for you have to Large debts such as these should be avoided at all costs. If it is possible, wait for at least a month until your savings are exhausted so that you can borrow a reverse mortgage loan.
Avoid loans at all costs. The hefty fines that come with loans and the interest rates will prove a barrier even if you clear the whole loan at once.