Monday, September 28, 2020

Avoiding Debt During the Pandemic

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2020 has been a difficult year in many ways. The coronavirus and Covid-19 pandemic has impacted

pretty much all of us in some way or another, some of us to a greater extent than others. This virus has

posed a serious threat to our health and wellbeing, but this isn’t where its chaos has ended. Instead, in

a bid to slow the spread of the virus and save lives, governments around the world have implemented

social isolation and social distancing measures, which have made businesses of all shapes and sizes

struggle to operate. With people unable to go to work or shop as usual for so many months, many

companies have begun to collapse. Many of us have lost our jobs. Many of us are operating on

reduced hours. Many of us have had to accept reduced pay packets as a means of simply holding

onto our positions. This, unsurprisingly, means that many of us have been struggling with debt as a

result. While debt may be inevitable for some of us right now, there are steps you can take to try to

help yourself as best possible. Here are a few to take into consideration.

Contact Lenders

If you have credit card bills, loan payments, financial agreements or other forms of arranged debt that

you’re trying to deal with and may not be able to meet with your reduced income, it is essential that

you contact the lenders you’re engaging with as soon as possible. Why? Well, many lenders are well

aware that people are struggling right now. Many are offering agreements where they will pause

interest, delay interest or provide payment holidays until you are back on your feet. This can help you

to avoid further fees, fines or marks on your credit record. A simple call can make a huge difference.

Create a New Budget

Creating a new budget is essential if your income has changed. After all, you need to make sure that

all of your essentials and necessary payments are able to be met. This may mean cutting down on

luxury or non-essential spending. To create a new budget, figure out your latest take home pay (your

salary minus tax payments and other necessary legal payments). Then deduct absolutely essential

payments like rent or mortgage payments, food, electricity, etc.  Whatever is left over is what you have

to spend. Even if it isn’t much, you mustn’t exceed it, as you will end up digging yourself into debt. A

professional in financial planning will be able to help you with this if you are struggling.

Consider Extra Means of Making Money

There are different ways you can attempt to make up extra money if there’s a shortfall on any of your

essential purchases:

  • Check out government help schemes such as grants

  • Take on freelance work or a second job

  • Sell belongings you do not need

These really are hard times for many of us, so hopefully, some of the above advice and guidance

might help you to keep on your feet until things begin to return to normal!

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