The COVID-19 pandemic has dealt a bevy of challenges to consumers. Efforts to curb the spread of the coronavirus have shut down businesses across the country, triggering furloughs and tens of millions of job losses.
The result, for many, is a devastating blow to their personal finances as they attempt to cover day-to-day expenses without the benefit of a paycheck or hope that they’ll quickly return to their old job or pick up a new one.
We’ve been here before. Just over a decade ago, the 2008 financial crisis dealt another blow to our wallets. In the midst of a crisis, it can be difficult to even think about rebuilding your finances. But, even now, you can make smart decisions, so you’re ready to get back on track as soon as possible. Here are the steps you can take during and after a crisis to shore up your financial house.
The best place to start with rebuilding your finances is to get it all on paper. Document the money that you’re bringing in — whether it’s from paychecks or unemployment — and everything you spend your money on, including your daily living expenses and incidentals. You can use this information to build an emergency budget to ensure you’re living within your means, which may be drastically reduced from what they were just a few months ago.
Now that you have a budget, it’s time to start making adjustments. It’s important that you focus on what you can cut out from your expenses to ensure you’re covering the most essential items and not spending more than you’re bringing in. It’s easy to start accumulating debt in times like these.
How can you make those cuts? Could you reduce your grocery bill by buying more frozen and canned vegetables and fruits, which can be as nutritious as fresh produce? Can you search out recipes for cheap meals that feature inexpensive proteins like eggs or beans?
Do you really need all those streaming services you’ve signed up for? Can you call up your internet and cable provider to see if they can offer a deal? NerdWallet offers six ways to lower your internet bill. There may be some hard decisions ahead of you, but they can be a temporary cutback to help with rebuilding your finances. Who knows, you may even decide you can live without some of the things you thought were important.
If debt and credit card bills are adding up, it may be time to call your creditors to see if they have any hardship programs available. Some may be able to reduce your interest rate or payments for a period of time. For best results, according to The Balance, be persistent in your requests, but also patient.
If you aren’t comfortable asking your creditors directly, consider reaching out for nonprofit assistance to help you determine what hardship programs may be available to help you start rebuilding your finances.
To bring in more money, can you pick up a side hustle? Could you sign up with an online platform like Rover, Etsy or TaskRabbit to earn some cash by providing goods or services to others? If your kids are growing out of their clothes and toys, can you schedule a swap meet with other families to get what you need? Do you have room for a roommate? Earning a few dollars here and saving a few dollars there can make a difference on your bottom line when rebuilding your finances in a crisis, helping to ensure that you can cover your most basic needs.
If you feel like you’re in over your head as you try rebuilding your finances during a financial crisis, a certified credit counselor for an analysis of your debts and review of your budget. They also can help you create a debt management plan, an important tool that can help to lift you up and out of any financial situation.
If you are experiencing financial difficulty and are looking for a solution, CESI is here to help. Our counselors are available to assist if you are experiencing job loss, temporary loss of income or financial hardship during this time. Contact us today for a free financial assessment with one of our certified credit counselors.
Consumer Education Services, Inc. empowers people to overcome their financial challenges and lead financially-healthy lives.
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