How Women Can Reduce Financial Stress and Control Debt During Coronavirus
Despite the economic turmoil and mass unemployment resulting from the coronavirus pandemic, consumer revolving debt fell by $ 24 billion in May, according to recent data from the Fed. This is the third consecutive month of consumer debt decline.
Covid-19 devastated the finances of many Americans, with lost jobs and wages, but there has been at least one bright side: The economic shutdown and extensive lockdowns have forced consumers, including many millennials, to cut back discretionary spending. This has given some of those who are in debt and not facing a looming financial emergency a chance to pay off their credit card balances.
“People didn’t spend at all and used that money to pay off their debt,” said Bernadette Joy, founder of #DebtCrushers, an initiative to help millennials, and women in particular, who are stressed by debt. and financial pressures.
Joy started #DebtCrushers in early March, before the pandemic hit the U.S. economy, and based on her personal experience: she successfully repaid $ 300,000 in debt and I wanted to help other women adopt the same debt-free lifestyle. Joy charges for consultations and membership in Crush Your Money Goals. So far, #DebtCrushers has helped millennial women pay off $ 500,000 in debt.
Her debt management program has helped women repay an additional $ 160,000 since the start of the pandemic, using what she calls her CRUSH system:
- Cultivate a new mindset to feel energized, not exhausted by money issues.
- Reverse engineer to break big budget goals down into small steps.
- Use your time, energy and money more efficiently.
- Spend without apologizing for what you love.
- Take action to ensure your income meets your financial goals, starting today.
Recently, Joy has turned to helping people with broader financial issues related to Covid-19, as the pandemic has made it harder for people to meet their basic financial goals, like saving a little bit each month. and pay off their debts.
“The traditional advice of ‘Put that amount of savings aside this month’ … just isn’t working for people right now. A lot of people are making decisions because of stress and anxiety.” , Joy said. “They think about the financial security of their loved ones and their families, and it is difficult to do that based on the traditional advice we received before the pandemic,” she said.
Unexpected expenses, including medical bills, for example, have become a problem for many.
Here is Joy’s advice to those struggling with debt and a lack of savings throughout the pandemic.
An emergency fund takes precedence over maximum debt repayment. Joy suggests that people pay only the debt they need – in some cases just the minimum monthly payment. Take advantage of the concessions on fees and interest of creditors, which some financial institutions were willing to grant during the crisis.
Joy’s reasoning for paying less debt right now is that individuals can work towards creating a 30-day emergency savings fund.
Emergency funds are essential for individuals in times of personal crisis, as the coronavirus recession has further proven. Many Americans never recovered from the financial blow of the Great Recession, and even in recent years, when the economy was booming and unemployment was at historically low levels, the percentage of Americans who couldn’t affording an emergency expense of $ 400 has remained dangerously high.
If you cannot reduce the debt as much as possible, reduce the total number of accounts held. Joy also advised her program registrants to reduce their account balances and reduce the number of accounts they manage or have to pay off. “Let’s not focus on the total amount, let’s reduce the number of accounts you have to manage specifically. It’s always a way to keep track of one thing less,” Joy said.
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Do not deprive yourself of everything, it will not help you achieve your goals. Even amid financial cuts, the emotional toll of coronavirus-related losses prompted Joy to advise her mentees to do something seemingly counterintuitive: budget for a discretionary item once a month they can hope for. .
“Having this thing to expect every month makes it a lot easier to manage to stay on their trip and deal with that emotional stress,” Joy said.
Be responsible, but don’t let yourself be derailed by making yourself feel guilty. Joy started her agenda so that women don’t become their worst enemy when it comes to taking financial responsibility, and that remains a constant goal.
“The blame and the shame of the debt was on itself, a lot of women say they found themselves in this situation,” she said. “Many women, despite different circumstances, experience the same stress and anxiety.… Whereas in personal finance there is individual responsibility… you cannot be ashamed of things that you cannot control.”
Disclosure: NBCUniversal and Comcast Ventures are investors in Tassels.