If you’re facing financial hardship right now, you’re not alone. Millions of people around the world are dealing with job loss due to COVID-19 and other economic pressures. Even before the pandemic, millions of people were experiencing untold levels of stress from living paycheck to paycheck, not knowing how they will pay their bills or put food on the table.
Left unchecked, financial hardship can have a lasting impact on your mental, physical, and emotional health. It can harm your self-esteem and leave you feeling afraid and ashamed.
If you find yourself in this position, know that there is help available. Take a deep breath and follow these practical steps below. And always remember: You can get through this.
1. Create a “lean” budget
The first step to navigating financial difficulty is to recreate your budget. Your new budget should reflect your current reduction in income and any other changes to your financial position. If you no longer have a consistent check coming in, you can still budget. You can create what’s known as a variable income budget: This type of budget puts an emphasis on covering your basic expenses.
- To get started, build your baseline budget that includes all your day to day necessities. This should include housing, food, transportation, medicine, and your other core essentials! Once you have that in place, you’ll have a clear picture of what your expenses are.
- Next, you’ll want to rank your expenses in order of importance to ensure your most urgent needs are met.
- Lastly, you’ll want to plan for future months. Know that times may be tough now, but they don’t last forever, and you can find ways to increase your income. Look into side hustles and remote jobs online. Look locally within your area.
2. Reach out to your creditors
If you are currently in debt, you might be stressed about making your payments. The good news is that creditors are aware that hardships arise. Many creditors offer hardship concessions to help you through a difficult season.
The key is to contact your creditors as soon as possible. Creditors have different financial hardship programs that could help you during this time. These include reducing your payments, waiving interest, or deferring your payments. Once you’ve explored all the options with your creditors, you’ll want to create the following document to ensure your request is in good shape.
3. Write hardship letters
Typically, lenders might ask for a written record of the financial setbacks you’re currently facing before they can approve eased terms. Hardship letters can be prepared for mortgage lenders, banks, or any other lenders you might owe money. Before you write the hardship letter, you have to understand what the specific lender qualifies as a “hardship event.”
Most lenders will consider the following as hardships:
- Job loss
- Divorce or separation
- Death in the family
- Illness or injury
- Military duty
- Incarceration of the primary breadwinner
Categories will differ by lender, but the key thing to note is that the hardships must qualify and be based on real, verifiable circumstances that the lender can fact check.
4. Work your way out at a pace you can manage
The key to getting out of a financial hole is to build your income. It will likely take time but always remember that it is possible no matter how difficult it may seem.
Nowadays there are opportunities to find side-gigs online. You can look up opportunities such as working as a virtual assistant, teaching English online, or working remotely as a helpdesk technician–and so much more. These can be a great way to jump-start your journey to earning additional income.
In addition to side gigs online you can also look for opportunities to freelance or work in the gig economy. This could include work like writing, web design, or offering driving services such as Uber or Lyft. Whatever you do, do your best to ensure that the additional income goes towards paying off your debt and paying your bills.
To sum it up, facing financial difficulty does not have to be the end of the world. There are steps you can start taking now to help you go from survival mode to stability. While the journey may have its ups and downs, the key to remember is don’t give up.
Keep your head up high and remain focused on your ultimate goals. Remember that everyone has their ups and downs and many who have been in this position before have overcome. Keep on keeping on, you’ve totally got this and you will come out victorious on the other side!
Did these financial hardship tips help you? Tell us your thoughts and ask Bola your questions in the comments–and for stylish markdowns, shop our Sale!
Bola Sokunbi, the founder of Clever Girl Finance, is a Certified Financial Education Instructor, money expert, CEO, and best-selling author. Sokunbi aims to help women like you take charge of your finances, stop living paycheck to paycheck, build real wealth, and get you in control of the life you really want to live.
Join The Conversation (2)
I had a difficult situation, too. covid left me out of work. I’ve been looking for work for a long time. My savings were running out and I decided to start my own business. My hobby was to cook desserts and cookies. I turned my hobby into my business.
Now I’m a pastry chef.
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The EMAIL API protected my emails from getting spammed. So I increased the number of receiving my messages by real people. Now among my clients there is even my former manager. My life is getting better
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