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How to Deal with Financial Distress Caused by COVID-19

The necessary measures put in place to contain the COVID-19 outbreak have triggered an economic downturn. There is great uncertainty about its severity since no one seems to have an exact answer as when this crisis will end. The sudden lay-offs and government lockdowns that shut down businesses have cost people their jobs and source of income. It is a devastating blow for many who have found themselves out of work as businesses are forced to shut their doors indefinitely.

It is okay to feel stressed with everything that is going on especially if you are running low on your savings or finances. However, the best thing to do right now is to learn how to cope with reality and focus on making the best decisions for you and your family. This article looks at some of the ways you can deal with financial distress caused by COVID-19.

woman facing financial problems on the phone with creditor
  • Prioritize Your Payments

If there is no enough money in circulation, chances are that you will run low on your finances at some point if you don’t prioritize how you spend what you have at the moment. If you have always taken pride in paying your bills on time, you need to do things a little differently in an emergency like this. First, you need to take care of your basic needs and necessities. If you cannot keep up with food takeout or doorstep deliveries then consider buying fresh food from the grocery store. Come up with a list of the order in which you need to take care of your bills and basic expenses.

  • Apply For Any Help You Are Eligible For

You may be eligible for some financial benefits relating to unemployment, disability, or family medical leave. Instead of waiting for your cash runway to go low, it is important to inquire about a paid leave or any financial benefits you may be eligible for. Keep in mind that rules vary by state and new laws may unfold as the government strives to figure out ways of addressing the COVID-19 pandemic. Although you may not have enough options if you are self-employed, do not be afraid to access your state government’s website as you can qualify for other financial benefits as well.

  • Opting Out of Auto-Payment Subscriptions 

It is important to think about the costs you can control if you are worried about your short-term finances. Now is the time to reconsider your subscriptions and prioritize them based on what can help generate revenue rather than increase your expenditure. Place your auto payments on hold to help you focus your finances on necessities. You can limit yourself temporarily to what you can live without until you get your finances back in good shape.

  • Contact Your Creditors

It is important to contact your creditors as quickly as possible before you start getting behind on your payments. Your lenders can always consider skipping payments, revised terms, mortgage payment deferrals, loan extensions, and reduced interest rates. The kind of feedback you may get from your creditors may vary depending on your payment history, your credit behavior, and the time you contact them about your current situation.

  • Look for Alternative Sources of Income

It remains unclear how long the COVID-19 outbreak will last and how long our finances will be affected. In the meantime, you can start looking for alternative sources of income. You can start by selling things that do not have any use around the house to help you raise cash for the short term. It is possible to earn extra cash from home by offering your services online or joining the freelancing platforms. If nothing fits in your category, then seek help from a mentor who can help you find your passion.

  • Manage Your Mental Health and Physical Wellbeing

Financial distress can lead to poor mental health because the more you are stressed about your finances, the harder it is to manage your psychological well-being. The sudden disruption of your work routine, the stress of unemployment, and the uncertainty of what may unfold in the future are additional factors that may interfere with your mental health. Some of the ways you can get through this pandemic with a sound mind are by practicing good self-care, keep a positive attitude, seek emotional support, get physically active and focus on what you can control.

As government officials and health care professionals work day and night to save lives and implement policies that keep us safe, you have to do whatever you can to get through the COVID-19 outbreak with a sound mind and body. Focus much of your attention on things that you can control and always hope for the better.

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