Many people have had their work hours reduced or lost their jobs entirely since the beginning of the coronavirus outbreak. Unemployment continues to rise.
In Canada, for instance, 9.5 percent of the labor force was unemployed in 2020, which represents a considerable increase from the previous year. The personal and social costs of unemployment include financial hardship and poverty, debt, family tensions, and breakdowns. The management of cash flow is a serious concern during these challenging times and many have been financially impacted by the global pandemic.
As the health crisis rages, debt burden grows. If you’re having trouble paying your bills, don’t worry because you’re not the only one. Break the endless loop of worrying by focusing on what matters the most. Maxing out your credit card makes you an irresponsible person. If you don’t pay that balance off in full right away, your credit score will be severely affected and it will cost you a lot in terms of interest. If you’re suddenly and unexpectedly facing an income loss and you don’t have emergency funds to rely on, don’t panic because there are ways to tackle debt.
Debt is a more pressing issue during the COVID-19 pandemic than usual. Keep on reading to find out what you can do to cushion the liquidity shock.
Reach out to your lenders if you risk missing payments
If you’ve been dismissed, you won’t have money for a while, so you should see if you’re entitled to wages.
Your employer might owe you wages at the time of the dismissal, which includes vacation pay and other money.
It might take a couple of weeks until you get your money, meaning that you might not be able to make your payments on time.
Paying your dues is unavoidable, so you should better contact your lenders and explain your situation. If you’re in the impossibility of paying your student loan, credit card, or mortgage, talk to the lending institution and check whether it’s possible to have your payments reduced or paused.
The financial institution is capable of understanding that life can be hard at times and keeping up with repayments can turn out to be a tedious task.
The type of assistance that you’ll receive depends on your circumstances. To be more exact, you might be offered a short-term or a long-term solution.
For instance, you might be included in a hardship program, which is designed to help people like you. If not, at least you can put a pause on your payments.
Attention needs to be paid to the fact that this doesn’t have a negative impact on your credit score or your ability to borrow money in the future. You can also use debt settlement companies to settle your debt.
Consolidate your debt and make it easier to manage
You’re struggling to make ends meet and, to make up for the loss of income, you’ll have to work extra jobs or pick up seasonal jobs. Still, you won’t have enough to pay your debt.
The question now is:
What should you do?
Well, consolidating your debt will make it easier to manage as you’ve got only one payment to handle. Debt consolidation means taking a loan to pay out multiple debts.
This way, you save on interest. The cash is deposited directly into your bank account so you can use it to pay off all your debt. A debt consolidation loan is a good idea if you have several balances. You can merge those balances into one, so you’ll have only one account to keep up with.
Be wary of scams
Not everyone has your best interests at heart. This being said, it’s important to know that some programs take advantage of consumers who are in financial distress. Avoid any organization that makes an offer that seems too good to be true.
If the company makes too-big-to-believe promises or guarantees it has access to a special government program, it’s most likely a scam. Do your homework and choose a reputable service provider. Pay close attention to the cost and terms disclosure and risks. What is more, make sure you can withdraw money without penalty charges.
Lending institutions do everything possible to help support clients in their time of need. The most important step in your financial journey is selecting a reliable partner.
There are numerous choices when you start looking for help. It’s fairly easy to become overwhelmed and confused by all the products in the marketplace. Educate yourself and take the time to do enough research before you agree to an offer. Find a reputable and honest organization to work with.
Keep track of your expenses and income
Unfortunately, most adults don’t have a sense of financial literacy.
They spend money without thinking twice and don’t even think about monitoring their financial transactions. If you’re like others, chances are that you don’t see the point in tracking expenses.
Or having a budget. What do you need to be convinced to take action? Maybe this will change your mind: You can identify and eliminate wasteful spending habits such as making redundant/repeated purchases or paying for subscriptions you completely forgot about.
It will surprise you to see how much of your income you’re actually wasting. Not only can you adopt better financial habits but also take control of your life.
It’s necessary to have a clear picture of your spending as there might be areas needing improvement. Separate the good from the bad and make choices that add value to your life. Contrary to popular opinion, financial freedom isn’t only about saving.
While setting money aside for rainy days is indeed important, it’s equally important to make conscious decisions when it comes to shopping.
The COVID-19 pandemic has changed the way we live our lives forever.
As consumers, we should change our habits and shift our priorities for our own good. Wasting money isn’t an option during these incredible difficult times. If you have to spend money, spend on basic necessities like food, utilities, transportation, and so on.