For millions of Americans, the Coronavirus pandemic has not only been a health crisis but a financial one as well. Many families were unprepared as their work hours were suddenly reduced—or their jobs lost entirely. With the loss of income, they took on mounting personal debt and watched their savings disappear. As the nation slowly enters a post-COVID economy, for those just beginning to pick up the pieces and rebuild their finances comes the inevitable question: Where do I even start?
If you’ve found yourself in the financial recovery stage of the pandemic and are wondering where to begin, don’t worry! These 4 steps can put you on the right path to rebuilding your finances for a post-pandemic life.
1. Bring Yourself Up to Speed
Due to financial hardship caused by the pandemic, many people had no choice other than to take on additional debt. Roughly 33% of Americans said they had to take on debt to make ends meet during the past two years (Source).
Now that we’re starting to see the light at the end of the tunnel, it’s time to take stock of your financial situation and gauge your financial health. Start by figuring out exactly how much debt you have, including the total amount owed for each debt, monthly due dates, minimum payments, and interest rates. Once you’re fully up to speed, you can begin to come up with a plan to tackle debt that works for you!
2. Explore Your Options
After you figure out how much you owe, you need to determine how you’re going to rebuild from that debt. There are several solutions to choose from like debt consolidation and debt management (and you can learn more about the various options available to you in another of our blogs!). For the sake of time, we’re going to focus on debt settlement.
Debt settlement can provide a clear path towards financial recovery—especially for those who went through significant financial hardship due to the pandemic. During the debt settlement process, a specialist working on your behalf negotiates with your lenders and creditors with the goal of settling your debt(s) for less than the original amount owed. Not only does debt settlement help you avoid bankruptcy, but it also lowers your overall debt. This way, you’ll be able to focus on what matters most: building a stable financial future for yourself.
3. Reevaluate Your Budget
Before creating your post-pandemic budget, it’s vital to look back on how your spending habits changed during the lockdown. With many businesses closing or operating under a limited capacity over the past two years, you likely spent less on activities like eating out, entertainment, and traveling but more on things like utilities and groceries.
As the world begins to reopen, adjust your budget and reallocate funds towards the spending categories that make sense for your lifestyle. In other words, if you expect to be commuting to work again in the near future and therefore spending more of your budget on travel, you may be paying less for your utilities since you won’t be home as much.
If you took on debt or fell behind on paying off debt during the pandemic, then this is the time to determine how you’ll afford to make payments towards your debt. There are several different debt repayment options you can choose from including paying down debt on your own, through a consolidation loan, or in a debt settlement program.
One of the benefits of a debt settlement program is that you won’t have to figure out how to repay debt yourself! When working with a debt settlement company like ACCS, you’ll have an experienced specialist on your side to help you evaluate your financial situation and determine an affordable monthly program payment.
4. Rebuild Your Savings
It may seem counterintuitive to tell you to save, but the COVID-19 pandemic showed everyone the importance of having a nest egg for when times get tough. To calculate how much you’ll need in your emergency savings, total up your “absolutes” (i.e., mortgage/rent, car payments, utilities/bills, groceries, etc.) and multiply it by at least 5.
If that number is more than you can afford, don’t let it hold you back from saving what you can. Whether you put away $50 a month or $500 a month, the important thing to remember is to pace yourself. If you’re still deeply in debt due to the pandemic, don’t rush your financial recovery. Focus on paying off your debt, but keep savings in mind.
Stronger Than Ever
While restoring your financial wellness is difficult, it helps to know that there is a path to get there. By following the steps laid out above, you’ll be able to create a financial future that can better weather the next economic storm.
If you are struggling with $10,000 or more in debt and would like to learn how debt settlement may be able to help, request a Custom Debt Relief Plan today! Our debt specialists are here to answer any questions you may have about our program and determine if it’s the right fit for you. Together, we can find the right path towards debt relief.