The Covid-19 pandemic was something that nobody saw coming. It has had a negative impact on all of our lives, but you can actually learn a lot from this pandemic when it comes to your financial situation. Here is how you can create a brighter future for yourself by learning from the pandemic.
Stop Using Your Credit Cards for All Purchases
We get it, things are uncertain at the moment and you naturally want to conserve your cash. By adding all purchases to your credit cards you can pay for everything when things improve. The problem with this is that it will drive up your debt levels and increase your credit utilization ratio which is not good from a credit score standpoint.
It is very tempting to accept an offer from your credit card company to defer your payments. They understand the situation and are trying to help you. But you need to take the long-term view here.
At some stage you are going to have to pay back what you charged to your credit cards. Also, with all of the economic uncertainty at the moment it is not a good idea to run up huge credit card bills.
What Are You Spending Your Money On?
Most people have no idea of what they spend their money on each day. Make it your business to record all of your expenditure and then analyze it to see what you can eliminate. Maybe you eat a lot of take away food on a regular basis. The cost of this soon mounts up so you could make your own meals at home instead.
In these difficult times it makes even more sense to be in control of what you spend. If you are already facing financial hardship and are receiving a lot of phone calls from creditors then you need to tackle this head on. Explain your situation to them and negotiate a repayment plan with them.
Take Control of Your Money
Create a budget for all of your expenses. You do not need expensive software to do this, just use a free Google Sheet or even use pen and paper. The important thing is to record all of your expenses including mortgage or rent payments, utility bills, credit card bills and anything else that you pay for each month.
You will feel a lot better for doing this and you will be able to see at a glance where you can get rid of unnecessary spending and also where the interest levels on the things that you have to pay are too high.
Call your creditors that are charging you high levels of interest and prepare to negotiate with them to lower the rates. They will certainly be willing to discuss this with you.
Approach Your Creditors the Right Way
You need to use a confident approach when renegotiating your interest rate levels with your creditors. They may ask you to make some “goodwill” payments for a certain period of time (usually 3 months). Accept this offer if you can because it will demonstrate willing on your part.
Tell your creditors that you want to come to an agreement that works for both of you. They know the effect that the pandemic is having on people and will be willing to listen to you. Don’t take no for an answer- stand firm and get your interest rates reduced.
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