Recent reports indicate that local governments’ revenues have nosedived by about $11.6 billion this year as thousands of companies file for bankruptcies. The trends in sudden closures of entities are understandable, considering that most businesses are enduring harsh economic times. As the implications of COVID-19 continue to manifest, more Americans will likely suffer this same fate.
The trickle-down effect of this pandemic has been high rates of unemployment and accrued debt. Are you struggling with debt managing?
You aren't alone. Millions of Americans are currently surviving without gainful income, a situation that has led to financial uncertainties.
Surviving past a financial crisis requires discipline and a deliberate adjustment of individual lifestyles. Have you been off work or gainful employment and wonder how to approach debt management? Here are 8 tried tips for debt management during a pandemic.
1. Establish a List of All Your Current Debts
Your first step towards managing debt should be to have a clear list of all the current debts. Ensure that the list is set out based on priorities. For instance, a debt related to mortgage should rank higher than credit card debts.
Once you have a clear list of the debts, you can then proceed to contact the lenders. Reaching out to each creditor allows you to have a candid conversation about the delays. You also get a chance to make new commitments regarding the loans.
2. Mind the Deadlines
It’s very easy to fall behind on payments during a financial crisis. The unfortunate bit is that such delays often lead to accrued interests. If your business or individual accounts have multiple debts, it will help to set-up a reminder.
Reminders ensure that you don't miss any payment dates in a given month. Late penalties often snowball and can easily get out of hand. Staying on top of your bills and avoiding post-deadline submissions can help you save a lot.
3. Pay More Attention to Your Accounts
Whether you are running a business or employed, it’s important to keep records or accounts of spending vis-à-vis your income. Such records come in handy in debt managing. You can trace back your spending and regularly assess the specific areas where you can adjust your spending.
You can use your records to see areas where funding can be cut to help you embark on a recovery journey. When focusing on debt management, the devil in the details matters. Scrutinize all your accounts for possible discrepancies in financial management, which, if adjusted, could help you save an extra dollar.
4. Budgeting Is Key in Debt Managing
One of the easiest ways to keep your personal and business-related finances afloat during a pandemic is to stick to a budget. It would help to make smart budget choices and ensure that you stick to them. Layoffs are now toppling 40 million in the United States as businesses grapple with the aftermath of COVID-19.
The turn in fate means that your ability to keep up with expenditure might suffer further crippling effects. A budget is your best tool when dealing with a sudden cutoff in income. Once you create a budget, it’s imperative to stick to it while paying specific attention to frugality.
5. Invest in Growth Opportunities
It's a pandemic, not doomsday. The best way to deal with debt managing is to focus on future growth. Your current downward spiral notwithstanding, you can still focus on other income-generating opportunities.
One of the cheapest ways to focus on future growth could be to invest in knowledge acquisition. This way, you can emerge from the current pandemic with better insights and the capacity to thrive. Investing in future growth opportunities can also help you manage debt better in the future.
6. Separate Your Business and Personal Finances
Most individuals don't realize how important this move is when dealing with debt management. If you mesh your individual finances with business finances, you might be in trouble in case you fall deep into debt. If you are dealing with debt, the first step should be to separate the two accounts.
In case you are out of gainful employment and have a business on the side, the business needs to exist as a separate legal entity. Most businesses facing the possibility of bankruptcy end up entangled in unending legal tussles due to this mistake. In case your debts get overwhelming during this pandemic, you’ll be safer having a separate account from that of any business you own.
7. Confirm Your Eligibility for Relief Programs
The CARES Act is among the progressive steps the government is making to cushion individuals and businesses struggling with debt. It's always prudent to consider such a helping hand when things get out of hand. The relief program offers at least $1200 to individuals struggling to deal with the effects of COVID-19.
Such programs can help you deal with basic expenses. Debt managing does not mean that your life should come to a standstill. If anything, the cost of living has gotten more expensive in recent times. It would be helpful to consider such government relief programs as one of your debt management strategies.
8. Consider Debt Deferment
Most creditors are also aware of the harsh economic times. Once you conduct a triage of your debts, it would also help to consider any information on lenders who are willing to waiver, defer, or reduce your current debts. Such information can help you follow up on any debt relief options available to you.
Debt Managing During a Pandemic Requires Open-Mindedness
Most businesses and individuals continue to feel the negative implications of COVID-19. As the economy plummets, debts have become the order of the day. Are you out of work, or your business is sinking, and wonder how to keep up with all your debts?
Debt managing can be hard during a pandemic. But with these eight tips, you can now manage your finances better as the world deals with this invincible enemy.
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