During the pandemic, fear and anxiety were at an all-time high around the world. Not only was there the constant stress of contracting the Covid-19 virus but for millions of people, there was the concern about how they were going to be able to pay their bills and support their families.
With much of the world being shut down and thousands of businesses shutting their doors for good, this was a valid fear. If you are one of the many people who were financially impacted and accrued debt during Covid-19, you are not alone. Fortunately, you have several options that may help relieve the financial burden.
Working Your Way Out of Debt Due to the Pandemic
If you had to take out a personal loan or max out your credit cards, try not to panic, this does not mean you are financially irresponsible. If you lost your source of income or your reserve simply wasn’t enough to carry you through, it’s likely you didn’t have many viable options at the time. With a working plan, you can get out from underneath it.
A good first step to working your way out of debt is to create a budget; knowing how much you are bringing in and how much you are putting out gives you a good idea of what you are working with. Once you have a better understanding of your cash flow, you may find ways to cut expenses to free up some cash to put toward your debt.
If your debt is substantial enough that you are unable to pay it off within a few pay periods, there are some strategies you can employ to help, such as the snowball or avalanche methods. These are simple yet effective ways to keep yourself on track and motivated to clear your debt.
For the snowball, you will pay off your smallest debt first while only paying the minimum on everything else. Once the smallest is paid, you will transfer that payment to the next debt, following the same strategy until all cards are paid off.
The avalanche is similar, with the only difference being that you would focus on the debt with the highest interest. Both are effective, so you will have to decide which one best suits your specific needs.
In the event that the amount of debt is insurmountable, a good financial attorney can help explain other options, from debt settlement programs to chapter 7 and 13 bankruptcy. The good news is that you don’t have to do this alone; with the right firm on your side, like Berken & Cloyes, we can walk you through every available resource to help you decide which path is right for you during your credit recovery journey.