How To Pay Off Loans While Unemployed

by | Jul 6, 2020 | Tips | 0 comments

How To Pay Off Loans While Unemployed(1)

There are about 40 million Americans currently unemployed, and this does not include those who lost jobs prior to COVID-19 pandemic. Under current conditions, this number is not expected to go down any time soon.

Source: https://pixabay.com/photos/eet-electronic-records-sales-4762568/

Due to the COVID-19 crisis, many workers continue to be displaced and without a job. They are laid off or furloughed on account of business closures and citywide lockdowns.  Consequently, the number of unemployed people is expected to rise.

These people will then struggle to make ends meet, considering that liabilities continue to exist even if the economy may seem to be at a halt due to the pandemic. We continue to be in debt, and our debt continues to earn interest, and will continue to become burdensome since utilities, and other liabilities will continue to pile up.

That being said, we need to find ways to reduce this burden even if we belong to the 40 million unemployed. At the very least, you need to pay off your loans to get a little financial freedom. Fortunately, there are a few ways to help you get rid of your debts despite unemployment.

Create a Survival Budget

Losing a job takes a significant blow on your finances. Hence, the first thing you need to do is to evaluate your financial status and create a survival budget.

To do this, pool all your present income, savings, unemployment benefits, and severance pay. By doing so, you will create a clear picture of your financial stance. It will also become the basis of your future spendings.

Then, create a new feasible budget.

Since you are unemployed, you won’t be expecting money to come in. So, you will need to minimize the amount of money you spend. You will need to cut down on expenses for things you do not need, and you must avoid going out.

Also, you will need to reduce subscriptions to packages or services that are not essential. You can also eliminate expenses for services that you can do for yourself, like laundry, cleaning services, and personal care services.

Then, you have to review your current loans, credit card liabilities, and other payables. It would help if you accounted for these to prepare yourself when the due date comes. You should not neglect payment of loans since this will affect your credit standing. You do not want to earn a bad credit score for not being able to pay your loans and other payables.

To make your budget work, you also have to be consistent and disciplined, so stick to your budget and remember that you no longer have a regular income to depend on. But be assured that a little sacrifice goes a long way.

Sell stuff or make use of your skills

If your budget still leaves you at a loss, you’re going to have to let go of a few things. You will have to make sacrifices to keep your finances afloat.

Perhaps, you may need to surrender your car, expensive bags, and luxury shoes.

On the other hand, you can also make use of your skills to earn money. For example, perhaps you have talent in baking. You can use such skills to bake goods which you can sell to your friends or neighbors.

Look for other sources of income online

In addition to selling your stuff and utilizing your skills, you can earn by making your services available online.

Perhaps, you are an excellent writer or a great speaker. You can make money online by writing for websites and online magazines. Or, you can use your communication skills for language tutorials online.

These are a few things you can do at home that will help you pay off your loans.

Refinance or modify your loan

If despite all those efforts, your financial obligation is still too much, you must contact your creditor and negotiate the terms of your loan.

Ask your creditor about the possibility of getting your loan refinanced to lower your payment, or to avail of other loan modification options that are favorable. Explain your employment situation to them and ask if you can negotiate to reduce interest rates or defer payment schedule.

Some creditors may consider your situation and grant your request. When that happens, you will have a better chance of paying off your loan without incurring much loss.

Ask the family for help

If all else fails, you can always ask your family for help. Perhaps, your parents, siblings, or relatives can lend you money without interest. Getting help from close family and friends in dire situations isn’t so bad.

Takeaway

Loans are always burdensome, especially for unemployed people. That is why loans should not be neglected to avoid putting yourself in deeper debt while out of a job. It may be hard to pay off debts when you have no income, but the good news is, it is not impossible. With a concrete plan, discipline, and determination, you will find yourself unburdened with loans in no time.

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Author:

Lilach Bullock

Published:

6 Jul, 2020

Categories:

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