With unemployment persistently knocking the 10% benchmark, many Americans are struggling to pay back their debt. From credit card debt to student loans to mortgages, there are many bills that Americans don’t have the income to pay. Wisely managing finances and debts while unemployed can help accelerate the road to recovery and prevent unwanted problems.
Resolve Debt Without a Job
Fortunately, it’s possible to eliminate debt or solve your debt problem even without a job. By strategically managing your situation, you’ll be able to sustain a living while hammering away at any outstanding debts.
1. Determine and acknowledge all sources of income. Even though you’ve lost your job, it’s important to seek out all sources of income. Do you qualify for unemployment benefits? Or did you have a part time job on the side that you can still rely on for some cash? By listing all sources of income, you’ll be able to create a plan to eliminate debt.
2. Prioritize debts. Not all debt is created equal. Some debts have higher interest rates than others, and these will generally be the accounts that you want to pay back first. By prioritizing high-interest rate accounts, you’re saving money by eliminating the interest that would have accrued when you pay it off.
3.Debt negotiation. There are many variations of debt negotiation. Whether you deal with your credit card company, bank, or student loan lender, it’s possible to engage in debt negotiation. Now, you likely won’t be able to reduce the amount owed, but you can request for changes in repayment terms and even interest rates. Be sure to research how to deal with each of these entities appropriately and how to stress your financial situation and hardship. For instance, when pursuing debt negotiation with a credit card company, it’s important to write a hardship letter.
4. Continue sending payments. Continue sending any payments that you can. Don’t be tempted to wait or skip a payment just because you’re unemployed, unless you absolutely can’t make it and it would cause a hardship. By paying debt even when unemployed, you’re preventing damage to your credit score.