Apart from being a global public health risk that continues to threaten the lives of many, the pandemic is also putting a lot of people in a very difficult financial situation. These trying times can be even more difficult for those who have existing debt that continues to accrue interest, in spite of current circumstances. If you are one of those people, here are some tips that could help you in alleviating the impacts of accumulating debt and in managing existing ones.
Take out a debt consolidation loan
It may seem counterproductive to get a new loan and use it to pay off existing ones, but this tip can be of great help in buying you more time. When you take out a debt consolidation loan, what you are actually doing is rolling all of your existing loans into one. This makes repayment easier (since you only have to concern yourself with one payment per month) and provides you with an opportunity to have a relatively lower interest rate on your debts. As highlighted in one of our previous posts ‘How To Consolidate Student Loans’, a debt consolidation loan may negatively impact your credit score initially since hard inquiries are bad for credit scores. However, in the long run, it may be able to help improve your credit score if you are able to make your payments on time every month.
Make the most out of technology
One of the ways you can make financial management easier these days is by relying on connected devices and making the most out of technology. In his article on how to adjust to remote working during the pandemic, digital nomad James Gonzales mentioned that the use of relevant apps can help you save more money in the long run. After all, such tools are often capable of encouraging increased productivity, streamlining work processes and assisting office appliances in order to achieve lower energy costs. A great example of an app that can help with money management is the Debt Payoff Planner. Finance writer Asia Martin mentioned how this manual input app can help you track your payments, notify you of due dates and allow you to see the result of making minimum payments vs. additional payments.
Refinance your debt
Since interest rates on mortgage and student loans are at their lowest these days, refinancing your debts can be a good strategy. Apart from getting better terms and lower interest rates, you can also get a lower monthly payment by initiating a new contract. To make sure that you are able to get the lowest refinance rate possible, Aly Vale of Fox Business highly suggests improving your credit score before applying. Some of the ways you can do this can include asking for a credit line increase, reporting errors in your credit report and getting added as an authorized user on someone else’s credit card.
Get guidance from a nonprofit credit counselor
If you are still at a loss for what to do with your debt, even after reading every article there is on the net, the next best plan of action would be to get guidance from a nonprofit credit counselor. Meeting with a professional can aid you in coming up with a plan to consolidate payments and lower your rates. If you plan on doing this, CNBC said that it is important for you to make sure that your credit counselor is accredited by the National Foundation for Credit Counseling. It would also be in your best interest to steer clear of settlement companies that can cripple your credit score with no guarantee of things working at the end of the day.
Times are understandably tough, but with due diligence and the right tips, you will be able to live through the pandemic without debilitating debt.
Written exclusively for Americasloancompany.com
by Allison Coolidge