No one should have to live with the burden of financial insecurity. While there’s no simple fix to financial struggles, there are solutions to help alleviate your burdens and deal with debt. It may take some time, but patience and diligence can help you navigate to a brighter financial future.
To get started on a path to a healthier wallet, mind, and life, follow these building blocks to get your finances in a better place:
Step 1: It’s Time to Create a Budget
The first step toward getting a better grip on your finances is to sit down and go over your household expenses. If you’re looking to lower your monthly output, try cutting household costs, eliminating a streaming service, bringing lunch to work, making coffee at home, and looking for alternative cash avenues.
Due to the pandemic, the federal government has programs in place to help assist people struggling financially. For instance, the CARES Act temporarily protects you from losing your home to foreclosure and entitles you to a hardship forbearance. There are also a variety of unemployment programs that have been extended until September and income tax waivers that will reduce the amount of taxes owed from 2020. Interest rates are also lower right now, so experts advise that now is the time to refinance your mortgage or student loans.
Whatever your approach is, make sure you’re consistently sticking to a realistic budget.
Step 2: Begin Repayment
A part of your budget should include directing money toward paying off any debt, especially credit card debt. There are several options that don’t include bankruptcy or paying the minimum payment for years to come on multiple cards: the debt avalanche, the debt snowball, and debt settlement through a debt management program, which is designed so that you can pay off debt in three to five years. Most experts agree that having $5,000 or more in credit card debt means it’s time to seek credit counseling. This may be the time to look into a debt management program. Credit counselors will work with you and lenders on any unsecured loans—credit cards, student loans, personal loans—to knock down your interest rate and consolidate your loans into one affordable monthly payment. By paying your debt on time and limiting your use of credit cards, you will also be boosting your credit score rating.
Step 3: Start a Savings
If you didn’t already have a savings account, either for emergency use or for retirement, it’s time to start one. By creating a budget and paying off your debt, you’ll soon have more money to put towards savings. Financial experts advise that as long as you can pay for groceries and your everyday household expenses, using any of the stimulus money or tax returns to put into a savings account is a good idea. By planning for your future needs, you are building a stronger financial future.
Step 4. Get Financially Educated
You might think you understand the ins and outs of the financial world, including how credit cards work and the nuances of your checking account, but if you’re in debt and struggling, there is still a lot to learn. Credit counseling agencies offer workshops on financial education. Once you have a better understanding, you will be able to make more informed decisions and improve your financial health.