Dealing With Debt During the Pandemic
2020 has been a difficult year for the vast majority of us financially. The coronavirus and Covid-19 pandemic has hit many of us hard. Government guidelines and restrictions that have been put in place to slow the spread of the virus (including lockdowns where stores can’t operate at all, social distancing measures that limit stores’ capacity and other factors) have massively impacted business’ revenue and profits. Companies, in turn, have started to collapse or struggle. This has resulted in many people losing their jobs entirely, people being made redundant, people having their working hours reduced and people having to accept lower pay for the work they do. People simply don’t have money to spend. Those who do still have comfortable jobs are still unstable and may be reluctant to spend on anything other than essentials, opting to put money into savings – just in case – instead. It’s not all too surprising that many of us are experiencing financial difficulty and are experiencing debt right now as a result of all of these combined factors. If you’re in this situation, don’t worry. We’re here to help. Here are a few pieces of information that can really help you to deal with your debt in a logical and effective way throughout the duration of the pandemic!
Use Your Savings if Necessary
The first thing you need to look at when you’re experiencing debt is whether you have savings to fall back on. All too many people make the mistake of avoiding touching their savings when they’re in great need of money. Instead, they’ll keep their savings in a savings pot or savings account and then take out other sources of credit to pay for the essentials that they need to live. This is entirely illogical in most cases. Your savings are money that you have sat in the bank. If you take out credit, chances are it will have some sort of interest rate attached. Why pay interest when you have your own source of money to draw from? Sure, it may feel less than ideal using your savings for something you didn’t intend to use them on. But financially, it makes sense to use this money interest free, rather than using someone else’s money with interest attached.
Seek Support
Governments around the world are well aware that people are struggling and are doing their utmost to keep their citizens afloat financially during these hard times. This is why many have implemented schemes, grants and more to help. What’s available to you will inevitably depend largely on the country you’re living in. But it’s definitely worth checking what support your government is offered and applying for anything that you are eligible for. This could include anything from stimulus checks, to furlough schemes to self employment grants. Some private companies are offering help too – creating grants and schemes that can help those of us who are struggling to keep on top of our bills right now.
Similarly, there are also debt management solutions that exist specifically to help you keep your head above water when things get unmanageable. For instance, you may want to research how to file a consumer proposal to find relief from consumer debts.
Contact Individuals You Owe Money To
Many of us owe money out on a monthly basis to others. The most common example of this is a landlord. If you’re struggling to pay your rent, contact your landlord and explain your situation to them. This is much better than simply missing rent payments and burying your head in the sand. Your landlord may be able to come up with some sort of payment scheme, or may be able to cut your rent for the time being to help you. This, of course, is generous and many landlords may not offer this option. But it’s always worth asking. You never know how lenient or understanding they may be!
Contact Lenders
If you have any agreement with a lender and you’re struggling to make these payments, it’s important to reach out to them for help and support too. Many lenders are currently offering payment holidays to people with outstanding debt who are struggling to keep up with their usual payments. Put simply, a payment holiday is an agreement that allows you to stop paying your monthly payments for an agreed period of time. You will then pay the money later when your situation has improved. Let’s take an example to make this really clear. If you have a mortgage on a house and you agree to take a four month payment holiday, you will not have to make your mortgage payments for the next four months. Instead, your agreement will be extended by four months, so you will simply make the missed payments later down the line. If you are struggling with issues such as credit card payments, you should contact your lender who may put a pause on the interest on your accounts for the time being. This will make monthly payments much more affordable. They may also be able to reverse any fees or fines added to your account for late payments throughout the pandemic too. Again, it’s not guaranteed that your lender will be this flexible and accommodating with you, but it’s definitely worth asking.
Contact a Lawyer
If you are struggling to make payments on your debt and you’re being hounded by debtors, bailiffs or other agencies trying to force payments that you don’t have, you can reach out to a specialist lawyer like Leinart Law Firm. They can help you and may be able to offer advice that will reduce your monthly payments or make paying your debt more manageable.
Cut Your Essential Costs
If you’re struggling for money, chances are you’ve already cut your non-essential spending significantly. But if you’re wondering where you can save even more money that can be put towards clearing your debts, you may want to consider cutting your essential costs too. This could include water, energy and food. Now, these are called essential costs for a reason – you can’t really go without them while maintaining a good quality of life. But you can still reduce the costs attached to them.
Reducing Water Costs
Generally speaking, people don’t get to choose their water provider. There will be a set provider in the area and you will use their services. But there are ways to cut your water bill. First, be savvy with your water usage. Have short showers instead of baths. Wait until you have a full load of washing to go in the washing machine rather than washing a few items at a time. Hand wash dishes instead of using the dishwasher. You may also want to check your tariff. Some companies estimate your bill on what’s being used by others in your area. If you’re a lone individual in an area filled with families, chances are you’re using less water than estimated and may be overpaying. In this case, having a water metre that tracks your individual actual water usage could prove a lot cheaper.
Reducing Energy Costs
Like we’ve highlighted above, you can reduce your energy costs by being sensible with the way you use energy in your home. Save energy wherever possible. Make sure to turn off lights in rooms you aren’t using. Turn the heating off when you leave the house. Turn the hot water off if you’re not planning on using any hot water in the day. Use fewer appliances at once. But the biggest change you can make when it comes to reducing energy costs is to switch to a cheaper supplier. Take a look at all of the options available to you on a price comparison site. This will show you all of the options and who has the lowest tariff. You can then sign up with them to benefit from the reduction in costs.
Reducing Food Costs
We all need to eat and you shouldn’t reduce the amount that you eat in a bid to save money. But there are still savings to be made! You just need to be a savvy shopper. Make sure to keep an eye out for offers. Always opt for unbranded or supermarket own brand options over branded options. Buy in bulk if you have the money available and it will save you costs in the long run. Reducing food costs is surprisingly simple. Sure, it may be a little more time consuming. But it can make all the difference!
Many of us are experiencing debt as a result of this pandemic. So, don’t ever feel like you are alone. There’s plenty of support out there and, hopefully, the above pieces of advice and guidance will help you to reduce costs and have more to put towards meeting your payment dates and reducing your overall debt! Just be as sensible as possible. Make sure you’re not too proud to accept help. Always seek out the best deals and offers on essentials to create more money to put aside. These steps really are straightforward and simple.