On January 1st, I could have never imagined what 2020 would bring. I started the year, as always, hopeful that this year would be the year I achieved all my goals. Then a pandemic changed everything.
But the pandemic is a stark reminder of just how quickly life can change. It’s important to have at least a little money set aside, as well as learning to budget and reduce expenses. Even if you plan to do that moving forward, though, you may need to first get through the financial issues this pandemic has brought with it.
Don’t worry. You don’t have to start this journey alone. Here are a few tips to help you beat the effects of COVID-19 on your bank account.
Negotiate your bills
You may not realize it, but your bills aren’t set in stone. You can negotiate your balance, monthly payments, and other aspects of your debts. Think about it. Your creditors would much rather you pay something each month than nothing at all.
Pandemics, fortunately, are rare. That means your creditors are well aware that many people are going through financially tough times right now. Yours won’t be the only call they’re getting from consumers eager to negotiate.
Here are a few tips to help your call go smoothly:
- Before you start calling around, gather your most recent bill and have everything in front of you.
- If you have a history of paying on time, point this out.
- When negotiating with a creditor that has competitors, stating that you’ve found a better deal and you’re thinking about canceling can sometimes be effective.
- If the person on the line can’t help you, ask to speak to a manager or supervisor who can.
- Pay close attention to the offer the representative gives. Many are trained to make it seem like you’re getting a good deal when they’re actually increasing your bill long term.
You don’t have to go it alone when it comes to negotiating your bills. There are now apps that will handle the process for you. One of those solutions is Trim, which automates bill negotiation. Simply link to your various accounts and Trim will look for savings, starting by suggesting subscriptions you can cancel to save money.
But the bill negotiation feature is where Trim really comes in handy. Trim will interact with the customer support team at your various service providers and negotiate on your behalf. They work with many of the top cable companies, as well as phone and medical providers.
Refinance your loans
What’s your biggest expense? Chances are, it’s your housing. Whether you rent or own your place, that monthly payment can really hit hard when money’s tight.
For that reason, one of the best things you can do is cut that payment down a little. If you rent, have a talk with your landlord about a rent reduction or a brief break while you get back on your feet. But if you have a mortgage, that won’t be so easy. You can contact your lender and negotiate a temporary break in payments, but that just delays your debt a couple of months.
This could be a great time to refinance your loans to reduce your payments. That applies not only to your mortgage, but also personal and student loans. Approval will still depend on your credit score and income situation, but it’s worth shopping around to see if refinancing is an option.
Ready to refinance? Here are some options to consider.
Refinancing a mortgage has traditionally been a time-intensive exercise that requires stacks of paperwork. Not anymore. With online lending, you can typically complete most of the process online.
If you need a little extra cash, a cash-out refinance may be an option. If you have substantial equity in your home, and interest rates have fallen, you may be able to reduce your monthly payment while also taking out some money that you can put toward other expenses.
You can see how much you qualify for with MU30’s Mortgage Cash-Our Refinance calculator below:
Student loan refinance
Student loans can be a big burden on your finances. In fact, the average monthly student loan payment is $393, and it can be tough to negotiate that down, especially if you have government loans.
You may not realize you can refinance your loans with a private lender, even if it’s a federal or ParentPLUS loan. Many private lenders are also more flexible in repayments, including letting you defer your payment for a month or two during tough times.
Credible shops multiple lenders to find the best deal on your student loan refinance. With one quick application, you’ll get rate quotes from up to ten lenders. Best of all, your quote will be turned around in just a couple of minutes. If you see one you like, you’ll complete the application process directly with the lender.Credible Credit Disclosure - To check the rates and terms you qualify for, Credible or our partner lender(s) conduct a soft credit pull that will not affect your credit score. However, when you apply for credit, your full credit report from one or more consumer reporting agencies will be requested, which is considered a hard credit pull and will affect your credit.
Credit card debt refinance
Credit card debt can make it tough to get ahead financially. There are a couple of ways you can refinance what you owe on your cards. One is to take out a low-interest personal loan to pay it off. You’ll still owe the money, but you can reduce the interest you’ll have to pay on it.
Another option is to apply for a new credit card and transfer the balance from your existing cards. Some cards have an introductory period where you’ll pay no interest at all. Check the fine print about balance transfers before you choose a card.
Fiona can help you track down a low-interest credit card or personal loan. Answer a few simple questions and you’ll be matched with credit card offers that meet your needs. The process takes less than 60 seconds and if you don’t see an offer you like, simply exit out and shop elsewhere.
Personal loan refinance
If you’ve taken out a personal loan, you may not realize you can refinance it. Yes, even if your loan was to pay off previous debt, you can always go back in for a better deal. You may find out that you can lower your payment and improve your terms by doing that.
LendingTree takes a different approach to connecting you with a loan. You’ll answer some questions about your goals and get recommendations for lenders who can meet your needs. LendingTree provides competing offers from a variety of lenders and even lets you contact lenders directly to negotiate a lower rate.
If you’re struggling to find loan refinancing due to your credit, Self Credit Builder Loans can help. Not only will they work with you to get you the money you need, but your repayments are reported to the three credit bureaus. Simply pay on time each month and you’ll be on the road to a better credit score.
Renegotiate your insurance premiums
Insurance is a necessary part of keeping yourself and your belongings protected. But COVID has shifted priorities, especially when it comes to vehicle insurance. If, like many consumers, you’re driving far less than you did pre-pandemic, it could be time to adjust your coverage.
With insurance, it’s not about picking up the phone and making a call to negotiate. Instead, the best thing to do is shop around and see what other insurers can do for you. Sure, you can try adjusting your coverage to see if that helps your premium, but often another insurer will give you a better deal.
Use a budgeting app to cut expenses
Budgeting is always a great way to stay on top of your finances. When you’re pre-planning how each dollar will be spent, you’re in control. If you normally budget, your approach may need to be adjusted for COVID-19. If not, this is a great time to start.
When you budget, you’re making a plan, but the best plans are built using the most information possible. Before you start budgeting, go to your online banking site and pull a report listing your expenses. You may even want to pull multiple months to get the most accurate picture possible.
As you review the report, prioritize your expenses. What’s most important? Chances are, you’ll need to put the basics first: food and shelter. Are there areas you can trim back? You may want to find ways to reduce your grocery budget, for instance, even if you’re no longer spending money on expensive coffee and restaurant food.
Once you have a budget in place, your work still isn’t finished. You’ll need to track your spending to get the information you need to make next month’s budget. PocketSmith monitors your spending and provides insight into where your current habits will lead you in the future. You can project six months, a year, or longer and adjust today’s spending accordingly.
Take a look at your credit cards
Normally, you’d want to work on paying off your credit cards, but now may not be the time. If you do have to rely on your credit cards to get you through, try to use them as little as possible.
One small thing you can do to reduce expenses is to lower your interest rate. You can try negotiating with the card issuer, but it will help if you can cite other offers first. Shop around and find offers lower than what you’re paying. When you call, you’ll be able to cite those rates and boost your negotiating power.
If your economic situation is short-lived, you can alternatively try to get a card with a no- or low-interest introductory period to get you through. During those months, you’ll at least get a break from the interest you’d otherwise pay, which can help you catch up on your bills.
Take advantage of resources
One of the few good things about having a tough time now is that there’s extra help. Realizing that many consumers are suffering, the government has put some programs in place to help.
The top of those resources is the Economic Impact payment of a couple of months ago. You should also make sure you’ve filed your taxes in case the government decides to issue further stimulus payments.
Here are a few other resources available to those who have been financially affected by COVID-19:
- If you’re unemployed, make sure you sign up for expanded unemployment benefits.
- You can withdraw money from your 401(k) without penalty during COVID-19.
- In case you missed it, the government is allowing a temporary suspension of student loan payments through September 30, 2020.
- Some banks are waiving fees during the pandemic. Check to see if your lender is on the list.
- FEMA has offered relief due to COVID-19, including extending flood insurance renewal payments and offering funding to state, local, tribal and territorial partners.
Consider a financial advisor
The truth is, sometimes you can’t see what you need to do. You’re just too close to the issue. When that happens, it can help to have an outsider take a look at things. If that outsider is an expert, even better.
But when you’re trying to recover from a financial setback, you don’t exactly have an excess of funds to pay a professional. Any financial advisor you’re considering should offer a free, no-obligation consultation. During this consultation, you can ask about fees. Compare multiple advisors against each other to find the best expert you can get for your budget.
One great way to quickly find a financial advisor is through Paladin Registry. You can search a directory of experts in your area and set up an interview to discuss details like fees and credentials. Click on “View research report” on any advisor’s listing to take a look at details like education and licensure information. You can also see the minimum assets you’ll need to have for the advisor to work with you, as well as the compensation structure. Many advisors work on a fee that’s a percentage of your assets.
Global pandemics may be rare, but life is full of surprises. Soon enough, you’ll find your financial situation begins to improve, and that’s when it’s time to take action. Make sure you have an emergency fund in place and work hard to pay down your debt. That will give you the peace of mind of knowing that you can tackle whatever challenges life brings in the coming years.
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