The pandemic caused more than a health scare. It caused serious financial strife for millions of people, too. As many consumers went into the pandemic with pre-existing credit card debt, the sudden loss of income and the economy’s downturn made it even harder for many to stay afloat.
Now that we’re in the pandemic, knowing how to manage your debt during this time is crucial.
Don’t Use Your Credit Cards
This may be the toughest part of your plan. During an economic downturn, many people rely on credit to get through. But, if you don’t know how you’ll pay the debt moving forward, it’s best to avoid accumulating more debt as it will only drown you even further.
If you already have credit card debt, you’ll need a plan to get out of it, but for now, focus on not accumulating more debt.
Create a Budget
Now’s the time to create a working budget – one that has only essential spending and no frivolous spending for the time being. While most consumers aren’t spending money on entertainment and dining out due to the pandemic, there’s room to save.
Focus on areas including:
- Groceries – Buy generic food, shop sales, and use coupons
- Household goods – Only buy necessities and when they’re on sale
- Impulse buys – Create a list and don’t deviate from it
Look honestly at your budget. Where could you cut expenses? Which creditors could you ask for a payment arrangement or temporary break from payments? Help is out there, but you have to ask for it.
Talk to your Creditors
Never ignore your debt. If you can’t make your minimum credit card payments on time, contact your creditors right away. Ignoring their calls only makes the matter worse. Many creditors have programs available including payment arrangements or deferred payment plans.
If you’re too overwhelmed to call your creditors yourself, consider securing help. Whether it’s you or a qualified third-party talking on your behalf, someone needs to discuss the situation and come up with a plan.
Avoid Refinancing your Mortgage
Many people think consolidating ‘bad’ debt into their mortgage is a good idea. It makes the payment more affordable and eliminates stress. Instead, consider a program that offers debt consolidation in Toronto that doesn’t use your home’s equity. You keep your equity, which is a major asset, and get help getting out of consumer debt the right way.
Prioritize your Bills
During a pandemic, you have to be honest with yourself. Look at your finances and prioritize them. Housing and car payments typically come first, as that’s your shelter and transportation. Next, focus on bills that affect your daily living, such as utilities and food.
If you can’t pay your mortgage, contact your lender right away. You can avoid foreclosure by discussing your payment plan or deferment options with your lender. The same is true of your car loan or utilities. Companies are willing to work with consumers today, but you have to ask for it.
Credit card bills should come last, but shouldn’t be ignored. If you can’t make at least the minimum payments, contacting them right away is important. Discuss your situation and see what plans they offer.
Get Help with your Credit Card Debt
If you’re over your head in credit card debt, get help. There are many resources out there for people in your situation. You aren’t alone, and you shouldn’t have to handle it yourself. No matter how dire the situation seems, there is a way out. Get the help you need to see the light at the end of the tunnel.
Our certified credit counsellors at EmpireOne Credit can help. We offer a free consultation to help you find the best way to deal with your debt and can help you repair your credit. Contact us today.