Chances are, the coronavirus pandemic has brought a lot of unexpected changes to your life. And if these changes have also added stress to your life, you’re not alone.
The COVID-19 Civic Life and Public Health Survey by the Johns Hopkins Bloomberg School of Public Health discovered a significant increase in the number of U.S. adults who reported psychological distress. In 2018, 3.9% stated they were struggling with distress, while in April 2020, the number had grown to 13.6%.
If you were already stressed due to your debt, this additional stress from the pandemic might make you feel close to a breaking point. And while you can’t do much to combat the effects of the coronavirus, you do have some power over your debt stress. Here are a few ideas:
1. Cut your expenses
Lowering your expenses can go a long way to lowering your financial stress, so take look at what you’re spending money on every month and reduce some of your expenses
- Reevaluate your housing: Since there’s a good chance housing is your largest monthly expense, figure out whether it makes sense to downsize or relocate to a more affordable neighborhood or town. Cutting housing costs can go a long way to reducing the stress you feel at the first of each month when the rent or mortgage is due. Ideally, you shouldn’t spend more than 30% of your gross income on your mortgage or rent.
- Get rid of any unnecessary spending: If you’re paying for cable, a gym membership you no longer use, or weekly mobile orders from Starbucks, cut these expenses from your budget. These are luxuries that may bring you more stress than joy during these times of uncertainty.
- Gamify your expenses: Do you have friends or family members who are trying to cut their expenses as well? If so, create a challenge where the person who reduces their spending the most wins a prize at the end of a given time period. Have some fun with it, and take the chance to connect with family and friends at the same time.
2. Create additional income
If you’re living paycheck to paycheck or unable to cover your monthly expenses, earning more income may be the ultimate solution. It may feel particularly hard to do this when nearly half the U.S. population is unemployed, but do your best to get creative and think about how to leverage your skills and interests to increase your cash flow. Here are some ideas.
- Get a side gig: A side gig is a job you perform in addition to your full-time job. It’s wise to find a flexible side gig that will allow you to work as much or as little as you’d like. In a time when lockdowns are still common, delivering food or online tutoring are just a few of the areas where work is still available.
- Start your own business: If you have an entrepreneurial spirit and believe you could offer a product or service that others can benefit from these days, consider starting a business. The Small Business Administration (SBA) and SCORE can help you hit the ground running.
- Look for a higher paying job: Yes, we are in a recession, but there are still jobs out there. If you wish you earned more at your full-time job, don’t be afraid to search for a new one. Establish yourself as an expert in your field by starting a blog or posting regularly on LinkedIn, providing consulting services, or guest speaking on a podcast or radio show. Doing these things can make it easier for you to land a job that comes with more responsibility and a bigger paycheck.
3. Stay up to date on your finances
If you delay paying bills or addressing financial issues you financial stress is likely to get worse. For this reason, it’s important to stay on top of your finances.
- Keep up with your bills: Set up calendar reminders or enroll in autopay to ensure you never miss a payment. If you can’t pay your bills, don’t hesitate to reach out to your lenders and creditors. They may be willing to work with you and accept partial payments or offer deferment.
- Secure your money: Don’t withdraw a bunch of cash. Try to keep most of your money in an account at your bank or credit union. This way you can keep it safe, yet still accessible.
- Face debts head on: Make your debt a priority so you can keep more of your hard-earned money every month. Consider debt snowball or debt avalanche If these don’t seem to work for you, you may want to opt for debt consolidation, credit counseling, or a debt relief program.
How to avoid financial stress in the future
In a perfect world, the coronavirus would be the last crisis you face. Since this is pretty unlikely, it’s important to set up new habits to prepare for similar situations in the future. Consider taking a new path:
- Lower credit card debt: Regardless of the economic conditions, credit card debt can cause your finances to spiral out of control. To avoid it, save up for the things you want rather than using credit to pay for them. If you do use credit cards, pay your bills on time and in full each month.
- Build an emergency fund: An emergency fund can be a real lifesaver when the going gets tough. Set up an automatic transfer from your checking account to savings account every month. Stash any tax refunds, birthday cash, or other windfalls you may receive. Sell any items you no longer use or need. If you combine all these strategies, you can start to build an emergency fund fairly quickly.
- Live below your means: Just because you earn $5,000 a month doesn’t mean you should spend $5,000 a month. The less you spend every month, the more you’ll have to save and invest. Put that extra money towards investments, a home-buying fund, a college fund in a 529, or just save for a much needed vacation. A larger savings account and nest egg is sure to give you peace of mind when you encounter a financial hardship.
Consider debt relief
If you’re struggling with your finances and hope to move toward a stronger financial position in the future, it might be time to take a bigger step. Freedom Debt Relief is here to help you understand your options for dealing with your debt, including our debt relief program. Our Certified Debt Consultants can help you find a solution that will put you on the path to a better financial future.
- 5 Ways to Get Rid of Debt Stress (Freedom Debt Relief)
- Americans Spending Stimulus Check on Debt, Bills (Freedom Debt Relief)
- 3 Things You Might Need More Than a Stimulus Check (Freedom Debt Relief)
- 7 Things You Can Do to Reduce Your Coronavirus-Related Financial Stress (American Psychological Association)