2020 & the beginning of 2021 are unusual times for many. However, paying off debt may still be a goal. I spoke with Angela Miles on Business First AM recently about my suggestions for those who are dealing with debt during this pandemic.
For Those with Steady Income
Assuming your income situation is relatively secure, consider the following:
- Make sure you have an emergency fund. Start small. Use the upcoming stimulus or a potential tax return to start or add to an emergency fund. If this pandemic has taught us anything, we’ve all learned that having money set aside is no longer a theoretical luxury.
- Budgets can be your best friend. Seriously. Budgets are a great tool to help you control your outflow instead of having expenses control you. Keep it simple. Start by simply writing down everything you spend each month. Believe me. The process is liberating when you make decisions on how to best direct your cash. Develop a love/love relationship with your budget. It starts by making regular budgeting a habit. You can do it.
- Minimize expenses and maximize your cash flow. Take advantage of the pandemic. We’re not spending as much on entertainment. Those working from home don’t have to buy as many clothes. Eating from home is actually less expensive. I proved this with a Make Meals @ Home Challenge. Seeing the silver lining in a global pandemic isn’t always easy. I get it. If you can, use this time to your financial advantage.
- Check on your stimulus status here.
- Plan for tax refunds by preparing for the deposit here.
For Those with Income Interruptions
I also spoke with Angela Miles from Business First AM on tips for those who have experienced disruption in their household incomes. We know that 2 million women have left the workforce over the course of the pandemic. The unemployment rate for women at the end of 2020 was 30%.
Many women work as a matter of choice in jobs in the service industry and those sectors were more acutely impacted. Have you heard this being called a “she-cession”?
For those experiencing job loss or a cut in pay during this pandemic (or any time really), make sure you focus on priorities. Dumping debt may still be a goal, but taking a break may be in order. That’s okay!
- Focus on priorities first. Ensuring that your housing, utilities, food, and transportation (if appropriate) should be your primary concern.
- Talk with landlords or mortgage companies and make arrangements and adjustments as necessary. I’ve given my tenants reduced rental agreements and taken advantage of mortgage assistance programs through my lenders. We’re all in this together. Reach out and speak up ASAP if you need help.
- Tap all available resources for assistance. This is not a time to suffer in silence or let pride stop you from seeking assistance. We have a stimulus payment or two coming for those who make under $75,000 annually or $150,000 as married couples. But that may not be enough. Please check into state and local grants for rental assistance. Sign up for newsletters from local representatives. Often these resources are limited and you want to be first in line. Tap into all resources available until you can get back on your feet.
- Look for alternative income sources. We’re all being forced to try new things. I know of a work-from-home opportunity that may be a good fit.
- Press pause on debt elimination. Often during my journey to pay off $107,000 of consumer debt, we took a break. That could be why it took 7 years. The length of time is unimportant. You may need to refocus on priorities for a time and revisit dumping debt once your income situation improves. That’s okay. Just don’t give up!
- Have a backup plan. What is the worst-case scenario? Have a plan for what you’ll do if that situation arises. It’s not pleasant to think of these life cases, but you’ll have a mental head start if you do face the worst-case scenario. Remember, it’s only temporary. You’ll get back on your feet once the world settles down. I’m sure of it!