A study by the Pew Research Center found that growth continues to stall in the global middle-class, even with the rollout of vaccinations and the world slowly opening up again. The pandemic has caused poverty rates to go up, with many living standards diminishing around the globe.
Experts also project that the pandemic will leave a debt legacy that is unprecedented in history and might warrant policy action at a national level. But we don’t need official studies to tell us about the negative impact of the global health crisis on the economy, especially if we experience the realities of those effects day by day.
However, if you find yourself drowning in debt due to the challenges of the past year and a half, it’s not the end of the world. Here are some practical steps you can take to get some relief over the situation.
Establish a plan
One of the most tempting things to do would be to escape and pretend that it’s not happening, but it could also be the worst thing you could do for your financial life. Ignoring the reality of the situation will get you nowhere, except maybe to a place that will make your circumstances much, much worse.
Trying to combat this situation might feel impossible, especially if you think the cards are heavily stacked against you and your success, but progress is still progress, no matter how little and how slow. The way to progress is to establish a plan that can help you experience some form of relief. Here are some first steps you can add to your “get-out-of-debt” plan:
- Check your credit score to see how lenders are seeing your current financial situation.
- Create a detailed list of where your money is going. Even a simple accounting using two rows—you can use the labels “money in” and “money out”—can help you gain an understanding of what’s truly happening in your financial life.
- Look over your monthly expenses and eliminate unnecessary ones. There are plenty of things we spend for that are non-essential: Netflix, cable, some subscriptions, even your daily latte. Making these cuts is not about falling for toxic financial advice or reductive tips that don’t take into account other factors that cause poverty and debt. It’s about getting your head above water for now and believing that there will come a time you will be able to afford these things again.
- Here’s something you need to embrace during this season: Budgets are not your enemy. Because so much financial advice has been based on this one simplistic tip, people tend to shy away from it, but establishing a budget and sticking to it will help you avoid unnecessary spending right now.
Consult with a lawyer
Another actionable step you can take when you feel like creditors are at your door and you’re starting to fear for your safety is to talk to a reliable collections lawyer. These experts can help you understand your options, whether it may mean filing for bankruptcy or a debt settlement. They know any legal and helpful way to help you gain some relief from your financial situation.
They can help you find ways to talk to your creditors so that you don’t have to worry about them freezing your bank account or putting a lien on your property. A lawyer can help you regain some form of financial stability, especially if there are businesses and assets involved, so don’t hesitate to consult with them.
Don’t delay payments
Another tempting thing to do when you’re already up to the neck in debt is to throw your hands up in the air. You might think that since you’re already in debt, you might let the whole thing snowball and neglect your payments. You might end up spending the money on something else. When your debt situation is out of control, don’t neglect your monthly payments. Now is not the time to skip your credit card payments—getting back on track will help you balance your debt situation a little better.
Don’t simply think of debt as something you owe to a person or an institution; consider debt as future income. This means that when you take out a loan, your future self is working to pay for your past self’s spending. Think of your dream financial future and why you want to tackle off your debt in the first place. Having an end goal in mind will keep you focused and determined to achieve your short-term goals.