A lot of people are struggling with debt at the moment. The biggest reason could be the ongoing pandemic that swept through the whole world. What started to infect a whole city in another part of the world quickly spread out and affected several countries all over the globe. When it hit the country, our health care system was overwhelmed with all the cases they had to attend to.
This was the primary reason why stay-at-home orders were handed down across the country. Even now that vaccines have been developed, a lot of people are struggling with their finances. The stay at home orders plunged the economy into a very challenging time where a lot of people lost their jobs and businesses closed down.
The Guardian shared that the US unemployment rate went to 7.9% in September. This is one of the biggest reasons why you might be struggling with debt at the moment. You could either be out of a job or your business is not doing good at the moment. You could have been relying on credit or borrowing money just to get by.
4 Reasons why you are Struggling with Debt
If you want to get out of debt, you need to understand the main reason why you are in one. The health crisis is easily one of the reasons for it. But there could be other things you need to consider. Here are some of them to look into.
Reduction in income
If you are struggling to make your debt payments, there is a good chance that your income is affected. This could easily be because you lost your job, putting in less hours, or your business is at a standstill. But this may not be all about the health crisis. These things happen even before the pandemic spread across the world.
Check your performance at work. Maybe there is a skill you can work on, improve, or learn to help you get a new job. It is also possible that the company or industry you are in was unable to adapt to market changes. When this happens, you need to widen your search and consider working in another industry to start bringing home a paycheck.
Marital and Family Problems
There are times where personal problems will start to reflect and ripple out into your finances. If you are having marriage problems, this can very well affect the way you manage your money. You could be struggling with debt because you are not seeing eye to eye with your partner. This can be the start of big problems ahead.
When you start having financial disputes with your loved ones, it can rip apart the trust you have built over the years. Business Insider shares that money is the top issue married couples argue about. If this happens to you, you might not feel like managing your payments altogether. Payment due dates could begin to come and go and you soon sink deeper in debt.
This is why it is important to be financially transparent with your husband or wife. Trust takes a long time to build up but it can quickly crumble when you start keeping secrets from each other. Make it a habit to be open and honest when it comes to your finances especially when you have problems. It is easier to solve them when you work together with your loved ones.
You could be struggling with debt because you are dealing with medical payments. It could be due to the coronavirus or something else entirely. You might already have pre-existing conditions even before the health crisis hit that you have been trying to manage. This means frequent hospital visits, a couple of medicines you need to take every day, and other laboratory exams you have to undergo to monitor your health.
This could be the reason why you are struggling with medical debt payments at this time. When it comes down to it, people would be willing to spend just to stay healthy. One of the best ways to approach this is to invest in your health now. Start with the food that you eat and move on to spending time getting some exercise in. These small changes can help keep you healthier and stronger as you manage your health problems.
Lack of Money Management Skills
If you do not know how to properly manage your finances, there is a good chance that you will be struggling with debt regardless of what your income situation is. You could be earning six-figures every month but if you do not know how to manage your money, it will not matter. You could still end up with huge debt payments.
Knowing how to manage your money will help you not only with debt payment but securing your future as well. If you can manage your payments well, you will be able to set aside for your future needs. It can be saving for retirement, setting aside a downpayment for your house, or even creating a fund to help you start a family. If you cannot manage your money well, you will easily fall into unmanageable debt.
How to manage your debt payments
Now that you have an idea why you are deep in debt, there are a few things you can do to get out of it. Here are a few of them worth looking into.
Create a comprehensive household budget
The number financial tool to help you manage your debt better is to have budget. To make it work, you need it to be as comprehensive as you can make It. This means that it should reflect all your expenses as well as sources of income. If you have a side hustle that brings in money weekly, you need to include that. If you buy breakfast on your way to work every day, you have to put that in your budget.
With a detailed list on hand, you now have a clear view of where your money goes. It lets you know how much you spend for each particular expense. You can now start cutting down on unnecessary expenses and use the money to pay down debt. Identify the ones you want to focus on and prioritize those payments.
One of the best ways to help you manage your debt problems is finding a repayment program that works. One of the best options a lot of people have been using is debt consolidation. This works by combining most payments under one account. What it does is it helps you focus on one account which lowers the chance of overlooking a payment due date.
Choosing to consolidate your debt could also lower your monthly payment if your credit score is higher now than before. It is also possible that if you choose to spread out the payment over a longer period of time, your monthly payment can be lower. Just note that you could end up paying more over the course of your repayment period.
It is tough to be struggling with debt especially at a time when the health crisis has put a strain on your finances. But remember that there are things you can do to overcome this challenge and come out better and financially stronger.