Many people are struggling financially, thanks to the Coronavirus pandemic. Even if you’re fortunate enough to be in good health, your life may be affected in other ways — especially where money is concerned.
If you’re worried about how you will keep up with all of your financial obligations right now, you’re not alone. A recent survey by U.S. News & World Report found that almost 60% of Americans have financial concerns thanks to the Coronavirus pandemic.
The good news is that you do have options if a job loss or income reduction is making it hard to keep up with your bills. There are steps you can take right now to give yourself more control over your financial situation.
Tracking your spending is a critical step to managing your finances at any time, especially when money is tight. If you want to create a budget that can help carry you through the difficult time, you must be honest with yourself and know where you’re spending money now.
It's wise to begin creating a bare bones budget by first evaluating every one of your expenses. Then, you're going to want to go through all of them and take one of the following three actions:
When working with a reduced income, it’s wise to cut expenses and negotiate lower bills. Many financial tools can help you with this process. For example, you may want to check out:
Remember, it’s also okay to adjust your financial goals right now if you need to. It might not be possible to save or pay down debt as quickly as you were a few months ago. When you put yourself on a bare bones budget and only spend money on the essentials, every dollar you save can be added into an emergency fund.
One smart way to lower your expenses is to consider consolidating high-interest debts, like credit cards, at a more affordable interest rate. Remember to research your options, as not everything that is advertised will be right for you.
However, some consolidation options might save you money and potentially improve your credit at the same time.
If all else fails and you still have more bills than income at the moment, don’t forget that you can reach out to the people you owe money to each month. Many banks, lenders, creditors, and utility companies are offering COVID-19 hardship assistance during this time to people who can’t afford to keep up with their bills.
Most companies are not offering forgiveness. So, you’ll still have to pay these bills at some point in the future. Some lenders are tacking deferred payments onto the end of the loan, while other creditors and utility providers may expect you to make up your missed payments sooner. It’s essential to get the details upfront before you commit to any type of hardship payment agreement.
Here’s the best part. If a creditor agrees to modify your payment (known as an accommodation), the new CARES Act passed by Congress protects your credit. As long as you weren’t past-due before the payment accommodation started, the creditor must continue reporting your account as “on time” to the three credit bureaus — Equifax, TransUnion, and Experian.
It’s also a good idea to keep an eye on your credit reports to make sure your lenders and creditors don’t accidentally report you as late. You can get free weekly credit reports online until April 2021 at AnnualCreditReport.com.
Keep in mind; these free reports won’t let you monitor your credit scores. So, you’ll need to visit other websites if you want to track those important numbers too. Some of my favorite free resources for monitoring your credit scores include:
It’s understandable to feel stressed out if you’re having trouble paying your bills during the pandemic. But remember you have options, and this is only temporary. Stay mentally dedicated to your long-term financial plans, but don’t feel bad if you need to tweak your budget in the meantime to survive the storm.
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