Unfortunately, we are entering what could turn out to be a very difficult recession in the United States. Tens of millions of people have lost their jobs over the past few months due mostly to fallout associated with the COVID-19 pandemic, and in many ways it doesn’t seem as though that tide is going to turn anytime soon. That’s a stressful thing for the public to have to encounter on a macro level, but it’s also downright terrifying for individual families and households that have to make ends meet every month in order to put food on the table, clothes on our backs, and roofs over our heads. What this really means for a lot of people, after all, is said and done, is that it’s time to get really good at managing debt effectively.
Money management – whether we’re in a recession or not – is always important, and obviously managing debt is a big part of that so that you don’t hit a debt spiral that spins out of control and leaves you with few options if any at all. Wise Loan has been helping people with debt relief and the like for years, and below we’d like to offer some ideas to keep in mind for managing debt so that you can navigate your way through these troubled waters unscathed or at least relatively unscathed. The good news is that our economy always comes back, so at some point, that’s going to happen for all of us.
Organize Your Bills
The first thing you should do with regard to debt management is organizing your bills so that you know:
- What you owe
- How much you need to pay each month
- When you need to make those payments
- How long you’ll be making those payments at the current level
The more you know about the true nature of your debts, the better off you will be when it comes to managing them. How many times have we received an email or a phone call about a bill that we forgot to pay, only to panic, pay it immediately, and likely incur some sort of late fee? If we do that enough times, it adds up to real money and can cause that debt to negatively capitalize, meaning you owe more at the end of the month than you did at the beginning.
Remain in Good Standing
Following the idea above regarding managing your debt, you should do everything possible to keep the accounts you currently have open in good standing. Whether it’s secured debt or unsecured debt, this is an important step. If you allow any accounts to lapse, then you will start looking at consequences that can harm you long into the future as well as in the short term. Examples of what can happen include:
- Late fees
- Service cut-offs
- Compounded interest
- Over-the-limit fees on credit cards
- Collection calls and letters
- Lowered credit score
- Limited credit opportunities in the future
Even if you’re only able to make a minimum payment for a month or two, do so in order to avoid any or all of these results to not paying bills.
Stash Whatever You Can Away
It may seem like an unrealistic idea if you’re struggling to pay bills, but one of the more troubling aspects of things being tight monetarily is that any surprises can be devastating. For instance, how are you going to pay for it if you blow a tire on your car or you need a filling in your tooth? Properly managing debt means that we need to assume these things are going to happen and that we’ll be able to pay for all or at least part of those costs without taking on further debt on a credit card or in some other way. Even if you’re only able to put $100 in a savings account, that’s still better than nothing.
Stick to the Plan
We’ve all had experiences where we’ve talked ourselves into one more trip to the ATM, one more time pulling out that credit card to pay for something we knew we didn’t need, but we bought anyway. Managing debt properly means that you need to do what it takes to not do that anymore. If you need to leave your credit cards at home, then do so. If you need to withdraw a certain amount of cash every week and live off of that until the following week, then that’s also something to consider. Regardless of how you handle it, remain disciplined so you can achieve what you want to achieve, which is financial peace.
Ultimately, effectively managing debt is an ongoing task. You’ll need to do what you can on a daily basis to keep things in place. If you’re truly stuck and need a boost getting started on this approach, you should reach out to us as soon as possible to decide if a cash infusion from us is going to help. We wish you the best in these difficult times, and once again, remind yourself that we’re going to get through this together.
The recommendations contained in this article are designed for informational purposes only. Essential Lending DBA Wise Loan does not guarantee the accuracy of the information provided in this article; is not responsible for any errors, omissions, or misrepresentations; and is not responsible for the consequences of any decisions or actions taken as a result of the information provided above.