According to Bloomberg, global debt at the government and corporate levels grew by $19.5 trillion during Covid-19. That money was used to fund stimulus payments, enhanced unemployment, and payrolls for employees whose companies chose not to let them go when the rest of the world was shutting down. Debt essentially got us through the worst of the crisis.
Several individuals and families experienced financial losses while in quarantine, but essential workers who were unable to collect enhanced unemployment may have suffered the most. If you’re feeling the effects of either of these scenarios, take out your handy debt payoff calculator. We’re offering some tips to help you rebuild your financial life after Covid.
1. Bring All Your Bills Up to Date
Credit cards and loan payments aren’t the only bills that fell behind during Covid. Several homeowners couldn’t pay their mortgages and the national eviction moratorium was ended by the Supreme Court on August 26th. Bringing your mortgage up to date should be a priority. You’ll also want to pay any overdue utility bills or ask for a payment plan.
This may sound overwhelming, but help is available if you need it. The CARES Act of 2021 offers mortgage forbearance programs that could help struggling homeowners get back on track. Additionally, utility companies are typically willing to negotiate with you. If you’re proactive, relief for this portion of your financial unmanageability is there for the taking.
2. Reevaluate Your Savings Strategy
Did you spend some of your savings during the pandemic? Now that we’re coming to the other side of it, take some time to reevaluate your savings strategy. Some folks just want to bring their accounts back to previous levels. Others are thinking more aggressively. Going through a crisis like we did last year often shows us how unprepared we are.
Look at retirement savings also. The stock market is showing a year-to-date return of 15.6%, so your existing 401(k) or pension plan should be doing fine. It might be a good time to increase contributions. The maximum annual contribution to a 401(k) allowed by the IRS is $19,500. That’s a lot of money for some folks, but it’s worth it if you can afford it.
3. Check Your Credit Report and Credit Score
It may seem strange that this is third on our list, but there’s a good reason. Seeing a low credit score before you stabilize your household bills and boost savings and retirement funds could cause you to lose focus on those tasks. A low credit score is an indicator that you need to deal with credit card and loan debt. Welcome to the club. Paying that off is the next step.
Most people have a general idea of why they’re doing poorly in this area, but a credit report tells them exactly why. Go to FreeCreditReport.com to view yours. Figure out what you need to pay and where you’ve gone into default. Then, work on a plan to take care of the issue. Interest rates are historically low right now, so you might want to consider a debt consolidation loan.
The Bottom Line: Take This One Step at a Time
If you walk ten miles into the wilderness, you need to walk ten miles to get out. Your problems may seem insurmountable right now, but they’re not. Take a deep breath. Be patient. Take it one step at a time. You just survived a global pandemic. Be grateful. You can do this.
Sources:
https://www.washingtonpost.com/business/2021/09/07/financial-recovery-post-covid/
https://www.bloomberg.com/graphics/2021-coronavirus-global-debt/
https://nlihc.org/coronavirus-and-housing-homelessness/national-eviction-moratorium
https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf
Also read: Key Tips to Keep Your Finances in Check
