The year 2020 was rough for many families and workers. The lockdown caused by COVID-19 resulted in many businesses getting shut down, and as a result, many people losing their jobs and becoming unemployed.
While you were stuck at home not making money, you were still getting hit with all of your living expenses. All of this caused many people to go into debt at some point in 2020. The main question to ask is: how can you go about fixing debt and recovering your finances in the coming year? It can be a difficult thing to do, as debt seems to build more debt.
Here are several steps that you have to take to recover your finances this year and get your life back on track.
Have debt written off
When it comes to debt, many people are embarrassed and refuse to talk about it. Getting help and going to professionals is one of the best ways to get everything back on track, and according to Jubilee Debt Solutions, you can have the government write off up to 80% of your debt, depending on the situation that you are in. This means that you can find a way to tackle that mountain and get yourself back on track.
Not only can you have the debt written off, but you can also have a debt payment plan created for you. This will have you pay back a portion of it every month, and can also have reduced interest rates. The government and companies understand that times have been difficult for people and are willing to help, you just have to be willing to reach out and get the help.
Create a budget
Once you have created a plan to pay your debt off, it is now time to create a budget. When creating a budget, you have to consider your income and relate that to your expenses, your disposable income, and how much you want to save. Your expenses will be all the mandatory things that you have to pay for each month such as rent, car insurance, and the debt payment plan that you created. Once that has been calculated, what you are left with is your disposable income. This is income that can be used in any way, however, it is recommended that you save a percentage of it.
Experts recommended you save at least 20% of your disposable income with each paycheck. What does this do for you? First, it can help to create a better future for yourself, allowing you to save up for more expensive and luxurious items. The next big reason is that it helps to create a safety net. If there is any disaster in your life or your living expenses increase, you are able to use those savings to soften the blow. This will give you some time to adjust to life changes and make lifestyle changes accordingly. If you want to recover your finances you will have to create a budget.
Create a goal
Now that you have a budget and a plan to pay off your debt, it is time to set some goals. When creating financial goals, you should be creating both long term and short term goals. This will help you achieve something on a large scale, while also giving you the motivation and satisfaction of reaching smaller milestones. Things such as being debt-free by the end of the year or paying a certain percentage of my debt by date are great goals to set. These goals will also work to keep you on track, following your budgets and the plans that you have made.
Make lifestyle changes
This is the toughest part when it comes to recovering your finances. You will have to make some sacrifices and change some things in your life if you plan on getting everything back in order. Take inventory of what you have at home and what are your joys in life. Create a list of things that you can sacrifice and things that you can’t live without. You don’t want to sacrifice all for your pastimes and hobbies, as it will be mentally draining. Finding a balance in a new lifestyle will be difficult, but essential for recovering.
By following these four steps, you will put yourself in the best possible position to recover from your debt. It will take a lot of time, and it will take discipline on your end, but with the right mindset, you can achieve it. How do you plan on beating your debt and recovering your finances in 2021?