Tips for Managing Debt After the Pandemic

tips managing debt after pandemic recession

The financial impact of the COVID-19 pandemic is still apparent more than two years after its onset. From layoffs to pay cuts, inflation, unexpected medical bills, and business closures, the pandemic wreaked havoc on people’s wallets and pocketbooks. People with debt are hit hard, and some have accumulated mountains of debt they are unsure how to manage. And let’s not forget about the upcoming recession predicted by many economists and financial analysts…

Luckily, there is hope in the post-pandemic period, and you can pay your debt and attain financial stability again. If you find yourself handling seemingly unmanageable debt, the 4 smart tips below will help.

1. Create a Payment Strategy

The most basic step in getting out of debt is developing a strategy for paying off your debt. Start by drafting a list of all your creditors and the amount owed. Then, think about how you will settle the debt. You can start with the biggest debt or the one with the highest interest rate.

Alternatively, you can use debt consolidation, whereby you merge all debts into one loan with one payment and a low-interest rate. According to Priority Plus Financial, debt consolidation is an appealing strategy because it helps you pay your debt faster while giving you control over your finances and maintaining your credit score. 

2. Work With a Credit Counselor

Handling debt can be daunting and strenuous, and working with a credit counselor can be beneficial. Credit counselors are private or nonprofit agencies advising individuals and businesses on money and debts. They help people struggling with debt to craft a debt repayment plan so they can attain freedom from debt promptly.

A credit counselor can also assess your financial state, income, and expenses to identify saving opportunities, so you pay your debts quickly. They can advise on bankruptcy and whether it is a good choice for your unique situation.

3. Avoid New Debt

While it may be tempting to take additional debts to clear both old and new debts in the future, it is not advisable. Additional debt is regarded as adding water to a sinking ship instead of removing it. New debt may solve a temporary problem but add multiple issues down the road. Therefore, avoid future headaches and stress by refraining from new debt until you have cleared current ones.

4. Watch Out for Scammers

Debt puts you in distress, and you will likely consider any plan or program promising debt relief. Unfortunately, scammers take advantage of desperate consumers to steal from them by making false promises.

Be wary of any person or organization promising to make your debt disappear, asking for upfront fees before settling your debt, or claiming to leverage new government policies or programs. Anything too good is a red flag, and you should avoid it. You would not like to lose more money in the process of ‘relieving’ current debts – you will have a double burden.  

Conclusion

Many people are facing overwhelming debt after the pandemic. Auspiciously, all is not lost, and you can overcome your financial issues and regain control over your finances and future. The tips above will ease the debt burden and usher you to a brighter, debt-free future.