The COVID-19 pandemic has sent our economy into a tailspin, and financial measures are mimicking past downturns like the Depression and the 2008 Recession. Banks, title loan companies, mortgage lenders, and other financial institutions have responded in kind to help their clientele and keep business going in this difficult time.
As we continue to navigate through this uncharted territory, it is more important than ever to get your credit, savings, and money health in order.
Read on for a few useful ways to get back on your feet financially while in a recession.
Prioritize Paying Off High-Interest Debt
If you’re carrying a high-interest balance on any line of credit, you’re paying extra every single month.
Getting rid of your high-interest debt is an easy way to shave hundreds from your household budget without even realizing it. If you have expensive credit cards or personal loans, consider getting an alternative line of credit to pay it off faster and with less interest.
Title loan companies offer fast, hassle-free financing to borrowers who might also be juggling poor credit or a change in employment.
Additionally, opting for a title loan allows you to maintain active use of your collateral without impacting the amount of cash you’re eligible for.
As long as you continue to stay out of payment default, you can take advantage of all of the benefits provided by title loan companies. Also, the lack of lengthy credit checks means that borrowers don’t have to add hard inquiries that can impact their overall scores.
One of the easiest and fastest methods for fast liquid cash, title loan companies are also a flexible option for someone who expects to pay their loan back in a matter of weeks. Whichever option you choose, reducing the interest you owe on outstanding debt is a smart decision for any borrower to keep at the top of their list.
Boost Your Credit Score
You might not be planning to make a large purchase any time soon, but that doesn’t mean you should neglect your credit report.
Today, credit history is used to verify applicant eligibility for more than just cars and homes. Your credit score might be used by:
- Prospective employers
- Educational institutions
- Fast cash loans
- Experiential opportunities
- Housing and lodging
Prevent low credit from putting your life on hold. Taking a few steps to reinforce the health of your credit is worth the effort, especially if you prioritize repaying outstanding balances and handling your bills on time.
Other influential factors that have a heavy impact on your overall score include:
- Total credit limit
- Debt ratio
- Outstanding bills
- Active collections
- Wage garnishment
- Tax debt
Taking care to prioritize all of these individual elements will help you build a strong credit foundation with good habits and smart money-making decisions.
Lenders often apply much more strict requirements during an economic downturn, like the recession we’re experiencing today.
Making timely payments and managing your debt effectively will keep your credit in good standing. With this one strategy, you can achieve all of your financial goals without running into issues with obtaining or extending credit.
Build an Emergency Fund
This one goes without saying, but it’s crucial for anyone and everyone to have a savings account. This account should only be used for emergencies and should cover about one to three months’ worth of standard living expenses.
The average American doesn’t have enough money stowed away to cover a basic medical or environmental emergency. As we dive deeper into this global health crisis, no family can afford to continue without an emergency savings fund.
It might seem overwhelming if you’re used to living paycheck to paycheck, but building a rainy day fund can be easy if you start small. Consider setting up an automatic deposit on payday, or get an online job for a few extra hours per week.
Simply removing a few unnecessary recurring expenses from your budget can give you enough to allocate substantially for your new savings account.
Change Your Spending Habits
Sometimes money management extends past simply calculating every dollar that goes out or in. If your spending habits are tied to emotional roots or environmental stimuli like family or financial hardships, the problem goes a bit deeper.
The first step toward addressing any negative habit is to acknowledge its presence in the first place. Keep a journal to identify shopping patterns, and you’ll be able to narrow down triggers and issues at the source.
Self-care can also go a long way when it comes to preventing unnecessary spending and poor coping strategies. Taking time for yourself can give your body and mind a hard reset at no cost at all.
If you believe that you’re spending too much as a result of negative events in your life, address what’s driving the emotional response to stop the problem at the source.
Look for Discounts and Hidden Savings
You might be able to reduce your monthly expenses by doing nothing more than calling your creditors and service providers. From internet to utility costs, your statements might have room for discounts, membership perks, and specials that can lower your bills.
These are some of the most popular apps for finding savings online:
- Coupon Sherpa
Always review your bill pay statements for errors, inconsistencies, and fee increases. These changes are often applied without notifying the customer, which isn’t always included in your service contract.
Even if you don’t find any errors or cost increases on your statement, it doesn’t hurt to ask for a discount whenever you can.
Use Smart Spending Strategies
Online shopping has skyrocketed since the pandemic started, and this trend is showing no signs of slowing down. Not only is the uptick in shopping helpful for the economy, but it has provided consumers with somewhat of an escape without the risk of going to the mall.
Did you know that you can save money while shopping online? There are a ton of apps and programs on the market that can help you save money in small increments every time you virtually swipe your card.
Every time you make a purchase online, consider using a credit card that offers cashback based on the shopping category. Paying off your balance in full every month will prevent you from paying extra in interest while continuing to earn rewards with every purchase.
Just because we’re in an unstable period in time, doesn’t mean you need to pinch every penny. Understanding how to spend using good judgment can keep you out of the red, even during a recession.
Take Advantage of Online Rebates
Shopping via certain platforms is a great way to find unbeatable discounts and helpful rebates online.
Digital coupons and e-rebates aren’t just a convenient way to rack up extra cash. It’s also safer since this method doesn’t require any person-to-person interaction.
Save more every time you go shopping by downloading mobile apps for all of your favorite stores and retailers. Check your accounts on each to find the discounts and specials you’re entitled to.
Many brands allow you to apply discounts automatically by checking out securely through their respective mobile applications.
Refinance Outstanding Loans
Interest rates are lower than they’ve been in decades, and consumers can take advantage of this by refinancing title loans and open lines of credit. If you have any active loans, you can pay less over time by reducing your interest rate.
Refinancing your loan can help you save money during the entire payment cycle by:
- Lowering monthly payments
- Reducing total compound interest
- Allowing the borrower to focus on paying the principal
To see if refinancing your auto or title loan is a smart decision, contact your local title loan companies for a customized quote.
Live Within Your Means
It can be easier said than done, living frugally is anyone’s best defense in a long-term financial downturn. Downsizing, minimizing your spending habits, and constantly re-evaluating your wants and needs can help any household reduce their family budgets.
This method is as simple as it sounds. Make sure your monthly expenses don’t exceed the income you’re bringing home.
Sit down with everyone you want to involve in the household budget and go over everyone’s liabilities, assets, and income. Understand the goals you’re trying to achieve, and consider every member’s unique circumstances to create a budget that works for everyone.
Once you know what’s being brought to the table, consider your auxiliary expenses like entertainment, eating out, pleasure shopping.
Determine which bills/expenses you can cut if any applicable discounts can improve your ROI, or whether you can add income to your budget to compensate for the expense.
Economic events like the recession we’re experiencing are stressful and unpredictable, but you can still make lemonade if you have the right tools. Consider these tips to revamp your financial plan and build wealth during the ongoing market downturn.