Many Americans are facing unprecedented times. Besides limitations on where they can go and what they can do, their income is stagnant. It’s an uncomfortable situation that can leave you feeling hopeless regarding your finances. The good news is prospects for a new stimulus check look promising. Now is a great time to address your debt so that you can keep your stimulus money for something you want.
Hardest Hit
Restaurants, hotels, airlines and sporting and entertainment industries received the hardest blow during the pandemic. Unfortunately, these types of places are difficult to socially distance. As a result, thousands of businesses that employed people either shut down or reduced their staff significantly. Nearly a year later, many of these businesses are not open at full capacity.
Consolidating Debt
With reduced incomes, many Americans used credit cards. Unfortunately, credit cards often contain high interest rates, some upwards of 25% or more. Carrying a large balance only enhances the problems, slowly increasing the minimum required monthly payment. If you have credit card debt, there are things you can do to reduce it.
Instead of using your stimulus to pay down your debt, you can turn to financial tools like debt consolidation loans. They offer much lower interest rates and a single monthly payment. This lets you pay down debt faster and free up money from your budget and keep the stimulus for the intended purpose.
Credit cards aren’t the only type of debt accumulated over the past year. Many Americans report being behind on everything from housing costs to medical expenses. Consumers can use financial tools like short-term loans to get back on track. You can receive as much as $2,000 to use on outstanding debts like the rent, mortgage, utilities, or insurance costs. Then, you can repay the loan in installments.
When you pay down your debt, you will be able to spend more money stimulating the economy because you won’t be sinking all of your money into what you owe.
Preparedness
COVID-19 was unexpected and caught many Americans off-guard financially. However, it provided a wake-up call. Millions of hard-working families live life week to week. They didn’t have any money in a savings account as a backup to prevent financial ruin. The recent events are an important reminder that life happens. Having enough cash tucked away to cover three to six months’ worth of your monthly bills and daily expenses will allow you to survive a temporary shortage of income.
Plan for Your Retirement
There’s no guarantee that the full Social Security benefits earned during your life will be available upon retirement. Even if Social Security remains in place, the amount provided is not nearly enough to live comfortably in your golden years.
The good news is you determine your financial status in retirement. Take steps now by allocating money to a retirement fund such as a 401(k) or a Roth IRA to ensure you enjoy the same quality of life. Many companies offer entry into a 401(k) as part of their benefits package. If your employer doesn’t, you can open one independently.
Remaining Out of Debt
Unforeseen events created higher amounts of debt than usual for millions of Americans. Going forward, it’s critical to keep debt under control. While some debt is mostly unavoidable such as a mortgage or a student loan, the amount you owe out is something you need to watch.
Learning to live within your means will put you in a better financial position. Frivolous spending and trying to keep up with the Joneses are things to avoid.
Supplement Income
Hard times often require a call to action to avoid difficult financial times. While not ideal, taking on a part-time job to supplement your income is another way to reduce debt quickly. Many companies are starting to return to business as usual and need part-time employees. If you prefer to work from home, there are many opportunities online to earn several hundred weekly.
Cutting Back Expenses
Ordering things like take-out for dinner and coffee on the way to the office several times each week can consume hundreds of dollars in a single month. Cutting back on unnecessary expenses will allow you to put more money towards outstanding debt and ultimately let you keep more of your hard-earned money.
Use lessons learned from the pandemic to your advantage. By consolidating debt now and controlling spending you’ll be able to spend the stimulus money on things you want and put the money directly back into the economy.
