There are several reasons why people accumulate debt. Sometimes, debt can occur as a result of bad spending habits, an unforeseen emergency, sudden unemployment, or an economic crisis. There’s never a good time to build up debt. However, there are times when it’s inevitable despite our best efforts. Unfortunately the times in which we’re currently living make it difficult for many of us to stay afloat.
With a pandemic disrupting the economy, resulting in thousands of employees to be furloughed from their jobs, many people left with very few options resulting in unfortunate debt. If you’re caught in a similar dilemma, know that you’re not alone. Here are some helpful tips on how you can be debt-free during a crisis.
Make a list
One of the first steps to helping you become debt-free during a crisis is to account for your total debt amount. Create a list of all of your debts and arrange them in order, starting with the most important. It’s imperative that you look at each of your debts candidly so you can devise a plan for how you will tackle each one.
Try to reach out to each of your creditors and lenders to see what options are available to help you clear each area of debt. Find out how each of these agencies is willing to work with you when it comes to reducing and eventually eliminating each debt.
Consider doing a balance transfer
Another thing you may want to consider in order to help you eliminate your debts is doing a balance transfer. Take a look at your credit cards with the highest interest, and see if you can transfer the balance to an account with 0% interest. However, be sure to check the requirements of that bank, as they may evaluate your credit score as well as the stability of your income to determine whether or not you’re qualified. If this option is viable for you, it’s worth a try.
Create a budget
A budget is an extremely useful tool that will help you get your finances back in shape, even in the midst of a crisis. A budget isn’t there to limit your spending or take away your freedom. In fact, it’s one of the keys to eventually achieving financial freedom, because it enables you to clearly see how much money comes in and goes out each month.
There’s no better time than now to create a realistic budget for yourself. Start by making a list of your daily, weekly and monthly expenses. Calculate the total amount of all of your expenses, and see how they match with your income. This is the time to decide whether it’s feasible for you to keep any items in your budget or if some need to go.
Work on minimizing your monthly expenses
When we’re in the midst of a crisis, it’s not a time for frivolous spending and impulsive buying. This is a time when you need to work on reducing your monthly bills and expenses in every way you can. Be organized and be mindful of each time money leaves your pocket. Every single cent counts.
Take time to revisit your bills and expenses regularly. Find areas you can adjust and reduce your spending wherever possible. For example, take a look at your utility bills. See if you can find a way to reduce your electricity costs by conserving energy and unplugging appliances that are not in use. If you’re not maximizing your internet speed or cable service, consider downgrading to a cheaper plan.
Look for ways to earn extra cash
Another tip for how you can be debt-free during a crisis is to find supplemental sources of income. If your current income is enough to cover your bills and expenses but doesn’t cover the cost of paying off your debts, you may want to consider looking for ways to earn extra cash.
Find some time over the weekend to see if you can do some freelancing or maybe even a teaching job. Maybe you have photography skills that you can put to good use at events as a side hustle . If you have a few hours to spare during weekdays, perhaps you can take on a part-time job. The options are extensive, but you have to look for them. No matter how little you add to your existing income, your earnings can add up and help you financially over time.
Getting rid of debt is tough, especially in trying times. If you want to learn how you can be debt-free in a crisis, these tips should come in handy!
Let us help you on your journey to financial freedom. Contact Calcite Credit Union for more information.
