By Andrea Woroch
Statewide restrictions are easing, and businesses are slowly reopening across the country, but consumers are still experiencing a lot of financial anxiety about the impact of the coronavirus outbreak on their income and budgets. In fact, a survey by LendEDU found that 63% of poll participants were concerned about running out of money and 51% had to dip into their savings to cover monthly expenses as a result of the pandemic.
The best way to deal with financial stress is by managing your bill payments and looking for ways to reduce your monthly spending. Here’s a step-by-step guide to help you do just that.
1. Prioritize payments.
If you are worried about having enough money to pay your bills, it’s important to prioritize which ones should get paid first and which ones to defer. The best way to do this is to spend time calling your creditors and bill providers to inquire about any available payment options to customers who have been affected by the pandemic. Just make sure to ask if you will be charged interest during this time and what repayment options will be available afterwards. In some cases, the interest charged during a payment deferment may be capitalized to your loan (such as a mortgage or private student loan) and that means you will end up owing more on your loan in the long run. In this case, it may be better to defer other bills such as your energy or cable bills.
2. Consider free service options.
Many people are looking for new ways to stay entertained, but you don't have to spend money -- there are some free options you can take advantage of. First, mobile users may qualify for free streaming services through their mobile provider. Sprint is offering a free subscription to Hulu while Verizon offers one-free year of Disney Plus. Second, you can access free movies, TV shows, audio and ebooks through your library’s digital platform, which you stream right from your mobile device or home computer. When it comes to working out, you can find free fitness videos on YouTube with plenty of variety to keep your routine fresh. You can also download a free workout app like Daily Workouts Fitness Trainer and 7 Minute Workout and put your gym membership on hold or cancel it altogether.
3. Negotiate rates and fees.
There are plenty of services you don’t want to give up, especially when you’re stuck at home. However, this doesn't necessarily mean you're stuck paying a high rate. Sometimes you can negotiate your way to a lower monthly bill without changing your package, so just call to ask if you qualify for any savings or promotions. First run an online search to see if any competitors are offering a lower price and use this as leverage in your negotiation. In some cases, switching providers may be your best or only option for lowering your monthly payment. This is especially true when it comes to your homeowner’s or auto insurance policy. Use sites like Insurance.com, PolicyGenius or The Zebra to gather quotes quickly and compare rates in one place. Otherwise, consider lowering your package or coverage options. For instance, this is a good time to lower your mobile data plan and hook up to WiFi at home instead to save money. Or, increase your car insurance deductible -- since you’re not driving as much, you’re less likely to get into an accident and this will reduce your monthly payment amount.
4. Boost savings with a side hustle.
Cutting expenses is the first step toward alleviating the financial pressure in your budget, but sometimes it’s not enough. Give yourself some extra cushion each month by taking on a side hustle. There are so many fun ways you can make money on the side that it won’t even feel like work. For instance, you can become a virtual tutor through Varsity Tutors, teach music lessons via LessonFace, or sell your favorite recipes at CookingLight.com for $50 each. If you love animals, you can even pet sit or walk dogs through Rover.com to make up to $1,000 extra a month. The platform makes it easy to set up a profile and a schedule that works based on your availability.?
5. Reduce energy use.
Now that you’re home more, energy use will be at an all-time high so it’s important to think about how you can cut back. There are small things you can do that will have a big impact on your electricity bill. For instance, unplug gadgets like your coffee maker, cable box, and chargers when not in use. These devices still use energy when plugged in even in the off mode, you could be wasting unnecessary energy that hikes up your utility bill. Additionally, washing clothes in cold water, using fans to help circulate air and installing a programmable thermostat are other ways to help reduce your energy bill.
6. Cut food waste.
People think of groceries as a necessity, but not everything you buy at the supermarket is essential. Buying food on impulse often leads to food and money waste, so it’s important to shop with a plan. Begin by finding a few recipes you want to prepare for the week and cross-reference ingredients with items you already have in your pantry or refrigerator so you don’t double up. Then make your list and stick to it to begin saving money.
7. Consolidate debt.
If you’re carrying credit card debt, you typically want to pay as much toward your balance as possible to avoid wasting money on interest. Given the current situation though, it’s better to preserve cash for emergencies. However, there are a couple ways you can consolidate debt to lower the amount you spend on interest and potentially lower your monthly payment.?
First, open a new credit card that offers 0% interest on balance transfers. These types of promotions are available for anywhere from 12 to 21 months, buying you more time to pay down your balance without accruing interest. This means, all of the money you pay toward your account each month applies to your balance to help you pay it off faster. Keep in mind, you need to pay off the balance in full before the promotional period is up so you don’t get slapped with retroactive interest. Ideally, your financial situation will stabilize before that happens so you can put even more toward your debt. Second, consider consolidating your debt with a low-interest personal loan to save on interest. Shop around to compare interest rates, as they can vary between lenders.
If you want to consolidate your debt, join MoneyTips.