The First Steps To Take After a Major Financial Setback
Many Americans toasted the end of 2022 and woke up in 2023 realizing that while the end is in sight, we still have a long way to go to conquer the pandemic and right the economy. Now, 2023 is underway and many Americans are still conquering the highs and lows of their finances in a global pandemic. You may be one of the millions of Americans who lost their jobs, closed a business, faced unexpected expenses or experienced some other major loss due to the pandemic. The first thing to know is this: You are not alone.
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Even more comforting, you still have the power to achieve financial freedom despite the setbacks of last year. With a little effort, you can shore up your budget, reduce your expenses and manage your financial recovery. The following short list of actions you can take right now will help you improve your financial health this year.
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.
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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.
Consider a Personal Loan
If 2022 put a squeeze on your finances, it's likely that you dinged up your credit cards along the way. High credit card balances greatly impact credit scores, and once it builds up, digging out from under can take years or decades. Consider taking out a personal loan to pay it all off at once.
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.
Revisit Your Subscriptions
When you investigate the autopay bills that come out of your checking account every month, 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 a number of streaming services for different reasons. Having multiple subscriptions of similar services, however, is hard to justify when times are tough.
With the money you save by cutting some items, you can make extra payments on your debt.
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: The First Steps To Take After a Major Financial Setback
