Reducing Your Financial Burden During a Crisis

JamisonHutton

We could all use a little extra help knowing how to handle our money during COVID-19.

The current crisis is damaging the physical and mental health of the world’s population, but it’s also causing a financial burden that some find challenging to overcome. Your health should be your first concern, and by making a few changes, you can weather the economic storm. By taking advantage of discount loans, relying on cash accounts, reducing spending, renegotiating interest rates, extending payment periods, and establishing a crisis budget, you can lower your financial stress during the pandemic.

Discount Loans

Although it’s more difficult to secure a loan during a crisis, several banks and credit unions continue to offer discounts to qualified applicants. You may need a new vehicle or property, and you can’t wait until everything returns to normal. If you’re in the armed services, you can apply for a military loan. When your finances are in turmoil, a discounted loan can ease your burden and allow you to move the savings to other areas of your budget.

Cash Accounts

Before you begin selling stocks or cashing in bonds, you should focus on your cash accounts. You can use your checking or saving accounts without incurring fees. If you have certificates of deposit that have matured, you can convert them to cash or transfer the funds to your checking account. Try to rely on your cash accounts as long as you can because fees can quickly add up if you make impulsive transactions. It may be tempting to sell your stock, but since the stock market has lost much of its value during the crisis, it’s best to wait for the market to recover before selling.

Spending Cuts

Another way to manage your finances during uncertain times is to make drastic spending cuts. This may be the most difficult recommendation to follow because it means cutting out some of the non-essential items or services you love. You can cancel your cable subscription or streaming platforms to free up money for food or medical expenses, and you can rely on free broadcasts that run off an antenna. Premium liquor, wine, and beer can be downgraded to less expensive brands, and gourmet food items like imported cheese can be cut in favor of cheaper varieties. Decreasing your luxury expenses will put a significant dent in your monthly bills, but you shouldn’t cut everything. When you live in stressful times, it’s crucial to have a release that temporarily helps you forget that the world is in turmoil

Lower Interest Rates

Making credit card payments during a crisis can be a real burden. If you have cards with high-interest rates, you may be able to lower them by contacting the lending agency. Money is tight for everyone now, but some companies will lower your rate if you continue to make payments on time. You can also cancel your credit accounts and replace them with cards that have lower rates. However, by mentioning to your current credit companies that you’re planning on closing your account, you’re likely to have a customer service representative offer you a new deal with a lower rate.

Payment Extensions

When your bills accumulate, you may have trouble paying all of them by the deadline. Utility, mortgage, and credit companies are usually willing to work with you on an extension if you contact them before you miss several payments. If you stop payments without contacting anyone, you can incur hefty fees. Most companies are willing to wait longer for their payment if you consistently meet the extension deadlines.

Crisis Budget

After you’ve made the spending cuts and organized your payment plans, you can create a crisis budget that reflects your current finances. A crisis budget will be much smaller than your budget from previous years, but if you stick to it, you can gradually adjust when conditions return to normal. Financial instability is another result of the current crisis, but if you make a few changes to your spending, you’ll have one less thing to worry about.

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Economics, Finance and Investing

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