With 22 million people in America now unemployed, having enough money for groceries, rent and bills is a serious concern. The novel coronavirus is tragic because of the loss of life but also because of the severe economic impact it’s having on people worldwide.
If you are struggling to make ends meet and need money urgently, it can be easy to slip into a feeling of hopelessness, and many people get trapped into borrowing from unscrupulous lenders with high-interest rates and inflexible repayment terms. To avoid this situation, consider the five tips below before going ahead with a loan.
Assess Your Loan Options
All loans are not created equally, and choosing the wrong one can lead to a negative cycle of debt from which it is hard to escape. We have all seen the quick cash advertisements on TV promising money in your account straight away, but it’s crucial that you read the fine print and compare your options.
You can find payday loan alternatives online and through various banks. Some providers offer loans specifically designed to help low-income earners through financial hardship by setting you up with low or no interest.
Use Your Emergency Fund
If you have been financially savvy and in a position to save up an emergency fund, now is the time to use it. When you are risk-averse and economically conservative, it can be a difficult decision to dig into your savings. But if you have been collecting spare funds for a rainy day, rest assured – this is that rainy day.
Check Your Government Entitlements
If you have lost your job or had your hours reduced due to COVID-19, there are a variety of government support options to which you may be entitled. Check online to find out if you are eligible.
Sell Some Things Online
If you are out of work at the moment, you might have some spare time to do a cleanout at home. In times of crisis, the secondhand economy is even more critical than ever. Kids still wear through their shoes, grow out of their clothes, and people may still need a table, television, or kitchen item.
Once you have sorted through the things you no longer need, take a look on Gumtree, eBay, and Craigslist and see what similar items are available and the prices listed. Find a spot with good lighting to shoot your photos, and include as much detail as possible. The more information you add, the less time you spend sending 25 people the dimensions of your item!
As a bonus, you will get the satisfaction of doing a good cleanout at home. Just remember that some restrictions may apply to item pickup – check your local social distancing guidelines.
Access Your 401K
Financial advisors have always recommended that you don’t touch your 401K until retirement. To discourage early withdrawals, funds generally have hefty fees if you want to access this money before you reach retirement age. However, given the unprecedented economic downturn, penalties for accessing this account have been loosened. Qualified individuals can take an early distribution from their fund of up to $100,000 without penalty. Keep in mind that you should only access your retirement fund as a last resort.
The COVID-19 pandemic will have an enormous impact on millions of families around the world. If you are one of those families and you are struggling financially, explore the suggestions listed above. If you need extra assistance, try reaching out to a credit counselor to discuss your options.