The pandemic has been difficult for everyone in many ways, not the least of which is debt. According to a study, more than 40% of Americans have increased their credit card debt since the pandemic began in early 2020. Dealing with pandemic-related debt can be troublesome, especially if the debt is not not something you are personally used to. There are, however, ways to help you.
1. Contact a debt relief company
While many people don’t automatically think of taking out a loan to pay off others, the fact is that working with a debt relief company such as Priority Plus Financial has many advantages. When you have overdue mortgage payments, credit card debt, medical debt, or other types of debt, it can be difficult to keep track of all the different payments. The best solution is to take out a loan that will help you cover all your small debt repayments. When you consolidate your debt into one monthly payment, you’ll have a much easier time keeping track of what you owe and who you owe it to. Debt relief companies typically offer larger loan amounts and offer competitive interest rates that allow you to rebuild your credit at a price you can afford.
2. Reduce your credit cards
Consider how many credit cards you use and if you really need to use them all. Are you using your credit card money to keep going out or making non-essential purchases? Reduce your entertainment expenses first. From there, think about how you use your credit cards. Do you use one to pay utility bills or other credit card debt? The more you can reduce the number of credit cards you use, the easier it will be for you to get back on the path to financial success.
3. Create and stick to a budget
It might sound like a “duh” tip, but you’d be surprised how many American families don’t. establish and stick to a budget. Even those who do often overlook certain expenses, which means their budgets aren’t working as well as they could be. When creating your budget, consider everything you pay for on a regular basis. In addition to your mortgage or rent and utility bills, consider child care costs, education costs, fuel to and from work, hobbies, clothing and other debts you are repaying. By knowing exactly what you spend each month, you can identify areas that need more attention or areas that you can cut from your budget. For example, if you rarely have time to watch TV, you probably don’t need to pay for 4-5 different streaming services right now.
4. Review your credit report
Do you deserve to pay for everything on your credit report? Credit reporting companies are run by humans and sometimes humans make mistakes. If you feel your credit should be better than it is, request your free credit report from the three major credit reporting agencies. When you receive them, comb through them for discrepancies. Have you paid off a medical debt that you still see on your credit report? Ask what you can do to remove it. Is there a derogatory mark on your credit report for something you never signed up for? It’s a good idea to make sure your credit information hasn’t been stolen. Knowing the contents of your credit report is one of the best things you can do to protect your credit score and your personal identity.
5. Have a conversation with the people you need to
Sometimes all it takes to stay out of debt is to have a conversation with the people you owe money to. Especially since the onset of the pandemic, debt collectors have worked harder to meet consumers in the middle. Contact your lenders. They may have hardship programs for people who have had COVID or lost their jobs due to the pandemic. Be sure to find out about the terms of the program, such as fees, credit limits, and how they affect your credit report. If you owe money on your utilities or mortgage, you may also qualify for local or federal programs that can help you catch up on your bills and breathe a sigh of relief.
6. Do your research on debt relief
Unfortunately, as many people really want to help people get out of debt, so many unscrupulous companies want to take advantage of already unlucky people. Before signing any agreements, be sure to thoroughly research the debt relief options you have on the table. This means understanding the differences between consolidation loans, credit counseling and debt settlement, as well as knowing what debt settlement companies actually do. Keep in mind that many lenders will not negotiate with debt settlement companies and debt relief agencies are not able to relieve you of all your financial debts. Always read the fine print and ask clarifying questions if necessary.
7. Start a side hustle
Sometimes the only way to get out of debt is to take on more work. This doesn’t necessarily mean you have to get a second full-time job. Today, America is a huge gig economy. You already have to run errands for your family, so why not join an app that lets you run errands for other people too? Maybe you know your city’s restaurant terrain well, or you live near an airport. You can deliver food or offer rides to people during some of your free time. There are even writing jobs, moving jobs, and DIY jobs you can do as needed, saving you a few extra bucks when you have some free time.
The pandemic has been hard on everyone. If you have found that you are more in debt than before 2020, you are not alone. Whether you’re starting a side hustle, talking to a debt consolidation expert, or trying something else, taking the reins is the first step to regaining your financial freedom.