How To Rebound From a Bad Financial Year in 2020
COVID-19 is raging out of control and worse than it’s ever been, but a vaccine appears to be on the horizon and a change in political leadership could bring fresh ideas and new strategies. Either way, the gauntlet of 2020 is thankfully, mercifully, at last coming to an end. For many Americans, however, a whole new set of headaches await as they head into the new year with their finances in tatters.
If you’re one of the millions of people who lost their jobs, closed businesses, were furloughed or had to spend money they never planned on to manage the crisis as it unfolded, you’re by no means alone — and you’re by no means out of options.
Despite the madness, the power of financial freedom still rests with you, and there are things you can do and steps you can take to shore up your budget, reduce your expenses and get a handle on your situation. The following is a short list of actions you can take right now to put yourself in a stronger position heading into the new year.
Last updated: Nov. 13, 2020
Listen To the Experts
One of the easiest steps to take costs nothing but time and could save you a lot of money in the long run: Take advice from people who know what they’re talking about. Personal finance podcasts like “Afford Anything,” “Women & Money,” “Brown Ambition” and “Future Rich” put some of the world’s foremost experts on the subject within your reach — and it costs nothing to listen. Likewise for YouTube channels like “Wealth Hacker” and “BeatTheBush” — and those are just a few.
Do some research, ask your Facebook friends what they like and subscribe to a few shows. Make your time pay by spending it listening to experts who specialize in solving the exact kinds of problems you’re experiencing.
Confront the Reality
It’s natural for people who are behind on their finances to block it all out because it feels too overwhelming to deal with — natural, but unhelpful. Only by staring the beast in the eye can you begin to create a strategy on how to defeat it.
Consider an app like Mint, which unifies your entire financial life under one site. That includes your income, credit cards, subscriptions, bank accounts, loans, investments, retirement accounts and all the rest. You’ll get a clear picture of what’s coming in, what’s going out, which debts are most dire, which expenses are costing you the most and what changes need to be made. Conquering the crucial psychological barrier of confronting the situation is the first step to changing it.
Investigate Your Autopay Bills
You might be bleeding financially from slow, steady drips that you’re not even aware of in the form of recurring withdrawals that you forgot about or never intended. Everything from mindfulness apps to streaming services, for example, come with free trials. When the trial period ends, the service kicks in at full cost — but people often forget that they ever started the trial at all and wind up with phantom monthly auto-withdrawals.
Other surprises can pop up when introductory rates end, like the kind that come with premium TV channels and internet service. You’ll get a great deal for a few months or a year before the full price kicks in, causing hard-earned cash to seemingly just disappear.
Read More: People in These 16 States Are Having the Most Trouble Paying Their Bills
Revisit Your Subscriptions
When you do investigate the autopay bills that come out of your checking account every month — apps like TrueBill and Trim make that process easier — you’ll likely notice that you’re signed up for more subscriptions than you knew and that there’s more overlap than a sensible budget can allow.
Cord-cutters, for example, might subscribe to Hulu for live streaming, Amazon Video because it comes with their Prime subscription and Netflix, well, because they’re human. That level of redundancy, however, is tough to justify when times are tough — likewise for the overlap that’s common with health and wellness apps, premium channel subscriptions and the rest.
Consider a Personal Loan
If 2020 put a squeeze on your finances, it’s likely that you dinged up your credit cards along the way. High credit card balances are the main killer of credit scores, and once it builds up, digging out from under can take years or decades, which is exactly the intent of your lenders.
Consider taking out a personal loan to pay it all off at once. You’ll enjoy the freedom of owing just one lender, paying just one monthly bill and knowing exactly how many payments you have left. Good credit can earn you a loan with single-digit interest, meaning lower monthly payments and big bucks saved over time.
Apply For a Balance Transfer Card
Although it seems counterintuitive, you can also attack credit card debt by taking out another credit card — one designed specifically for balance transfers. These cards offer introductory rates with 0% interest. When you’re approved for the card and transfer your existing debt, that debt doesn’t go away, but it does stop accruing interest. This way, you can put that debt on the back burner for a year or more, making only the minimum payment, while you make a run at any other debt you might have or try to save more money.
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This article originally appeared on GOBankingRates.com: How To Rebound From a Bad Financial Year in 2020
