Virily Editor
There’s really no denying that the US economy is a mess. And financial experts are warning that things will only get worse once the student loan payment pause ends. Many Americans are living paycheck to paycheck, and the dream of supporting a family on a single income is out of reach for many. Amidst the turmoil of low wages, high costs, stacking debt, and high healthcare expenses, Americans are looking for relief. And if you look in the right places, you can find it.
We’re not here to pitch the latest get-rich-quick scheme or MLM. Instead, we’re here to give solid advice to stay afloat during the current economic crisis and get your feet back on solid ground until the waves pass.
Prepare for Student Loans to Resume
The education department has confirmed that this is the last year you can consolidate student loans without taking a penalty for deferment on forbearance on your Income Dependent Repayment Plan history. If you are on an IDR for student loans, make sure to contact your lender before October to discuss the new Saving on a Valuable Education (SAVE) Plan and onboarding payment pause to work out if you need to turn in any paperwork or documentation and ensure you get signed up.
With your student loans now set to 5% of your discretionary income, it’s time to look at your other finances.
Lay Out a Budget Sheet
Google lets you use their Sheets app for free, or you can invest in Microsoft Excel. Either way, work up a budget tracker to take into account your income and anyone else in the household. Next, create a table with all of your expenses. List what they are, what they cost, when they’re due, and what category they fall under. Categories can be things like “Bill”, “Debt”, “Luxury,” “work expense,” “Medical,” and so on. Set up the cost column to calculate the total at the bottom. Those are your monthly expenses, so the minimum you need to be bringing in from combined incomes. To the side of the table, feel free to list out annual expenses, what they cost, and when they are due as well.
Now, you have a clear picture of what you are bringing in and what needs to go out. You can adjust as needed, pruning some of the luxuries or finding coupon and bargain hunter sites like Honey to help you reduce expenses. You can also calculate if you will have any extra at the end of the month and know what yearly expenses you need to save for and how much you can afford to put into savings. Having everything set out in front of you can paint a clear picture and help you avoid decision fatigue.
If you have large one-time expenses you are building toward, make a separate sheet in the same workbook and list them out. One column for the expense, one for the estimated cost. You can use this sheet to prioritize what order you go after these payments in and track your savings toward them.
Build Your Credit
It may surprise you to learn that you can start to build your credit even in the midst of an economic crisis, but it is possible with the right resources. You can sign up for something like the Varo Believe card, which works like a credit card but without the fees and APR. Instead, they just require you to have a financial account with them and to put a set amount of money in a security account to cover your credit card expenses if your payment is late. It’s almost a glorified debit card that helps you improve your credit score.
The biggest tip for building credit is not to overspend because you have a card. Instead, use the card to pay your standard monthly expenses like bills and gas and then pay it off with the money from your checking account that was meant for those expenses. This lets you keep up with your bills and build credit without adding to your debt. Once you have a better credit score, you have access to better debt relief programs. Just be sure to do your research and avoid any debt consolidation scams or payday loan sharks.
Work Towards Starting a Rainy Day Savings
This will be more of a long-term goal for you. As you steadily take control of your finances, it’s important to keep tabs on your mental health. While you won’t be able to splurge on self-care immediately, you can work your way towards starting a ‘rainy day’ savings. This is kept separate from your emergency savings and is specifically for those little treats that help sprinkle a bit of joy into your grind.
Some people start with a small coffee shop card that they occasionally drop a couple of bucks on, but eventually, you want to open a savings account with a decent interest and start making regular deposits. When you have enough profit at the end of your month to siphon a bit into your rainy-day savings, you know you’ve successfully reached a more tenable financial situation. Just don’t let your guard down until you can have six months’ worth of income stored in your emergency fund. All it takes is one crisis to end up back at the beginning, but now you have a steady path to work your way up.
