Staying Out of Debt During the Pandemic

The coronavirus and Covid-19 pandemic has wrought havoc with many of our finances this year. Governments around the world have implemented social isolation and social distancing measures, which have had a negative impact on businesses in a whole host of industries. This has been essential to slow the spread of the virus, but has also resulted in job losses, company collapse and general economic issues. If you’ve found yourself in the category of people, there are ways to help yourself avoid sinking into debt. Here are a few that could help you!

Create a New Budget

Most of us operate to a budget. This lets you know exactly how much money you make, how much is spent on your essentials and necessary payments and will then let you know how much disposable income you have available to spend on non essentials. But this year, chances are your income may have been impacted, which means you are going to have to come up with a new budget in line with your new income. Make sure that you don’t exceed the disposable income attached to your new budget. If there is no disposable income and you’re not making ends meet, you may need to consider the following step.

Reduce Outgoings

Reducing your outgoings may be essential to operate within your new budget. Cutting luxury purchases is simple. But there are further ways to save if you need too. Switch providers for some of your essentials, such as utilities, insurance or more. Different providers may offer the same services at a lower cost. You can find out more about insurance here for a start!

Contact Lenders

People often find themselves slipping into debt because they can’t keep up with the payment plans and agreements they’ve already taken out before the pandemic. If you have credit card bills, loan payments, financial agreements or other forms of arranged debt that you can now no longer afford to pay, you need to reach out to the lender and let them know your change in circumstances. They may be lenient and may be able to reduce your monthly payments or grant you a payment holiday. This can help you to keep up with payments and will reduce the occurrence of penalty fees, fines and charges for late payments.

Consider Extra Means of Making Money

If you’ve followed the above advice, have cut all unnecessary outgoings, have tried to negotiate with lenders but haven’t been able to get to a reasonable agreement, or any other measures have been taken and you’re still struggling, you may want to consider alternative ways of gathering together some extra money. Some common ways of achieving this include:

• Checking out government help schemes such as grants
• Taking on freelance work or a second job
• Selling belongings you do not need

2020 really has been a difficult year for the vast majority of us. If you’re worrying about slipping into debt, hopefully, some of the above advice will help you to stay out of it!