10 Ways to Save Money so that you Can Keep Paying your EMIs and Avoid Moratorium

COVID 19 which started out as a health crisis has resulted in an economic crisis as well. To help you mitigate your financial troubles the Government has come up with many programs and incentives. 

In one such move, the Reserve Bank of India has allowed moratorium of 6 months from March to August for payment of all term loans availed by individuals. While, at the outset, this may come across as a relief measure, it may end up adding to your financial woes later. 

Availing moratorium on your loans may have unintended consequences such as making you less eligible for a future loan, increased cost of interest on the existing loans and more. 

That is why we have compiled an easy list of ways in which you can save up money and you can keep paying your EMIs. 

Start with a budget 

The only way to save up is to know where and how much you spend. Start with keeping a check on all your expenses so that you know how much money is spent on essentials like food, medical expenses, education, etc. It might be a good idea to include your EMIs in your essentials if you can manage.

This is the bare minimum amount that you need every month. For you are in financial crisis, avoid spending anything above this amount. 

Postpone all big spends

With the lockdown being relaxed in most parts of the country, individuals are venturing out and making spends on various gadgets, household appliances, etc. Take a moment and access your needs. If you are in any sort of financial distress you could postpone big spends for now. 

Learn smart spending tactics

With the lockdown in place, people are going out lesser and spending lesser. Even when you spend, do it smartly to get more buck for your money. While going out for shopping out carry a list of items you require so that you aren’t tempted to buy extra. 

While doing your grocery run, buy seasonal vegetables and fruits that last longer. With better meal planning we bet you can cut down some of your expenses. Avoid ordering food. 

Use water, electricity and cooking gas effectively so that you can cut down on their bills. 

A smart tip here would be to channel all the savings that you make through all these avenues into your loan EMIs account

Make use of free resources available

With the onset of COVID 19, many organizations are sharing resources free of charge. Free online classes or videos for fitness on social media, free movies on YouTube, E-books accessible online are some of the examples. 

So you can cancel all those unnecessary subscriptions and save up some money. 

In addition, you can also use some of these resources to learn new skills which can be useful during tough times.

Make use of one-time income from various sources towards your EMIs

Recently, the Indian Railways announced that they have refunded Rs 1885 crore against cancellation of railway tickets booked for travel during the lockdown. Similarly, the Income Tax refunds of up to Rs 5 lakh were also made in the month of April 2020.

Make use of all such one- cash inflow towards payment of EMIs so that you can avoid additional financial distress due to the moratorium. 

Make use of different payment methods

If you are experiencing a pay cut or a financial crunch, learn to use different methods of payment available. For example: You can use your credit card to delay paying for your expenses immediately. In the same way, you could also make use of Pay- Later apps to spread out your payments. 

However, we would like to mention that these methods of payments should be used carefully as these methods of payment can carry a high rate of interest and penalties if the amounts are not paid by the due date. 

Take the allowed grace period on your Insurance Premiums

All forms of insurance are very important. Especially in these times of uncertainty, never miss paying a premium. However, most of the insurance premiums come with a grace period of 1month from the due date. You can put off premium payment within the grace period without losing coverage. 

But we wouldn’t advise you to completely miss paying your premiums. 

Pause your investments

If you are unable to pay your EMIs and you have channelled money towards various investments such as mutual fund SIPs or Recurring Deposit accounts, you may pause it for some months. 

You may also choose to liquidate your some investments like gold or low return yielding investments to close your loans. 

Make use of your existing skills/resources to earn a supplementary income

If you are finding it difficult to meet your expenses and your EMIs, you may want to try earning a side income by utilising your skills as a freelancer, online teacher, etc. 

You could also rent out your property, your vehicle or even rent out some of the rooms to generate a second source of income. 

Choose your moratorium wisely

If you are someone with more than one loan and if you have to opt-in for a moratorium on some of these loans, do it wisely. It is always good to choose moratorium on loans with lower interest rates. As it would not result in an interest burden later.

Personal loans and credit cards carry a higher rate of interest, so it is advisable to keep paying EMIs on these loans. 

 

We hope these tips will be of help to you. Even if you have to avail of the moratorium now, make sure to pay back the accumulated interest as soon as your finances improve. 

 

Akshatha Sajumon


An ex-officer of the Indian Air Force and a CFA, Akshatha loves writing on personal finance and credit products. When not working, she loves taking road trips to offbeat locations.