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Managing Debt During Financial Hardship

3 Ways to Tackle Financial Hardship

Financial hardship is not something that people ever want to experience, and yet, some of us may face it at some point in our lives. Sometimes, the financial hardships we experience are due to things that are entirely out of our control, such as the COVID-19 pandemic. If your reliable income has declined or disappeared, and you’re struggling to meet all of your expenses and obligations, consider these tips to help manage your Credit Cards and other debts during financial hardship.

Make Minimum Payments

Paying the minimum on your Credit Card bills every month will avoid hurting your credit and will keep you in good financial standing with your Credit Card issuers. However, if you are struggling to pay the minimum, contact your Credit Card companies. Some of them may have assistance programs, especially during economic downturns. For example, Yolo Federal offers a Skip-a-Pay program that allows you to skip two non-consecutive months on eligible loans per calendar year. To learn more about our Skip-a-Pay program, visit our website here.

Alternative Sources of Income

During times of financial hardship, consider filing for unemployment. Unemployment insurance benefits are designed to partially replace lost wages, and the amount you receive is determined by your recent earnings, your employment situation, and your state’s formula. 

Determine where else you may have money available to use. If you have an emergency fund set aside, this may be the time to use it. This is, of course, precisely what your emergency savings are for—to cover you when your reliable income has been impacted.

You may also want to consider equity in your house as another income option. A Home Equity Line of Credit (HELOC) utilizes the difference between your home’s value and what you currently owe on it. With a HELOC, you can use your home’s equity as you need it for large, unexpected purchases rather than taking a large lump sum upfront, like with a cash-out refinance. For more information on HELOCs, schedule an appointment with a local expert.

Debt Consolidation 

Debt consolidation is the process of bundling multiple card balances into a single payment. When you’re financially strapped, making three, four, or five Credit Card payments may feel a bit daunting. However, when you combine your Credit Cards into one payment, you may feel a bit more in control and are less likely to accidentally miss a payment. A Signature Loan is an excellent option for debt consolidation with payment periods of up to 93 months and a fixed, low rate. To learn more about our Signature Loan, visit our website.

During times like this, we realize how prepared—or unprepared—financially we are for life’s un-expectancies. If you would like additional information on how to maintain your financial health during a crisis, check out this blog post. As your local support, we encourage our members to contact us if they need financial assistance or just want to evaluate their current financial situation. Our team of experts will help guide you through these tough economic times to ensure a brighter financial future. Schedule an appointment with a Yolo Federal representative to get started.

 

Subject to approval. Restrictions may apply. Yolo Federal Credit Union is an Equal Housing Lender. NMLS# 401954

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