5 Ways To Keep Your Finances Under Control During Crisis Brand voice
The COVID-19 pandemic has not only put our lives at risk, but has also hampered the global economy. Many people lost their sources of income or their jobs, while others were asked to receive reduced wages.
The global health crisis has plunged economies into recession. In addition, markets that had recorded years of profits were wiped out in a matter of days. In these difficult times, we must take drastic precautions to protect both our health and our wealth from the effects of the pandemic.
To help you with your finances, here are five financial tips that can help you deal with this economic crisis.
Manage your credit
Governments around the world, as well as many credit unions and banks, have changed their lending policies in response to the COVID-19 pandemic. Some have even set up new funds for borrowers, such as:
- Alternative Payday Loans I and II. PA I loans are limited to a term of 6 months and a maximum of $ 1,000. In contrast, PA II loans are limited to a maturity of 12 months and a maximum of $ 2,000.
- Emergency small-dollar. These unsecured loans are offered for amounts of at least $ 5,000. The best thing about this new financing is that you don’t need to pay off the loan for ninety days and it matures within 24-36 months. The terms of this loan are intended to provide borrowers with quick liquidity.
- Small Business Administration Paycheck Protection Program. SBA 7 (a) lenders are eligible to provide loans under the Paycheck Protection Program.
- Increase in revolving credit limits. More and more revolving credit products, such as home equity lines, offer borrowers quick access to money.
Others have temporarily modified existing loans, including:
- Reduction of the interest rate. Minimizing the interest rate for a set period can relieve borrowers and reduce their payment.
- Payments with interest only. For a defined period of time, borrowers can benefit from lower payments while avoiding negative amortizations.
- Fee for modification or waiver of late payment. The fee waiver helps borrowers avoid increased debt and obligation payments.
- Withholding of payment. Credit unions may allow a borrower to defer monthly payments, but with an agreement to pay interest and principal later.
- CARES Law on Tolerance. The CARES Act provides relief to borrowers who are financially affected by the COVID-19 pandemic. The service agent or lender must offer forbearance for at least 180 days. There will be no interest, penalties and additional charges.
During this global health crisis, it has become more imperative to manage and maintain your credit, whether you are looking for a loan, using your credit card more, or just being proactive about your financial health. With the drop in rates, more and more people are checking their status.
With interest charges coming down, if you have credit card debt, consider paying it off. In doing so, you will reduce your monthly financial obligations and put yourself in a position where you can build up a better nest egg.
Plus, you can start to focus more on the important things. Otherwise, your credit score could be affected. Do you know how bad credit scores affect borrowing? A bad credit rating will make it harder for you to apply for new loans and get the best possible rate.
A credit score is considered bad when it is lower than the FICO score of 699. Since lenders use credit scores as a credit score assessment of a borrower, those with bad scores will likely see their application. loan refused. In addition, those who are accepted still face high interest rates. Therefore, it is important to take care of your credit score early on.
Create a crisis budget
If you lost your job during the pandemic, it’s important that you create a crisis budget first. Figure out how much money you still have for budgeting purposes. When planning the budget, remember to include an emergency fund, money left over from your bank account, etc.
Say, for example, you saved $ 1,000 for a planned beach getaway, but due to the pandemic, that vacation was canceled. You can include the $ 1,000 in your budget to make ends meet.
Make sure you inspect one of your cashback credit cards for rewards balances. You can transfer this extra money to your checking account. Once you know how much money you have right now, figure out your essential expenses, such as:
- Basic utilities
Take out a loan with caution
With the loss of their jobs, many are tempted to To borrow money. However, it is advisable to take out a loan only if you have to. Consider getting the money from other sources, such as liquidation investments and emergency funds.
Plus, don’t borrow too much and make sure you have a plan in mind for paying off your loan before you apply. Remember that your financial difficulties will get worse if you cannot pay your current contributions.
Find other ways to earn money
We all have something we can do to make some extra money, whether it’s babysitting, freelancing, or selling things we don’t need. The money earned from these activities may seem small, unlike your salary in your main job. However, these small amounts are of great help, especially during this difficult time.
Be on the lookout for fraud
The Federal Trade Commission has warned the public to remain vigilant and on the lookout for crooks who are taking advantage of the crisis. Beware of suspicious messages claiming to be charities, employers, or creditors you don’t recognize.
Only respond to email addresses or phone numbers that you know are reliable and trustworthy, such as contact details listed on a creditor’s website.
Crises like the COVID-19 pandemic require calm and calculated decisions, especially when it comes to finances. Being careful and prepared will help you cope with whatever awaits you during this and other crises. By managing your credit, creating a budget, and being an observant borrower, you can turn a potential financial disaster into a temporary setback.
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