After almost a year and a half in quarantine, it may be a shock to your credit card when you start venturing out and spending money again. We have compiled some helpful tips to prepare you from going further into credit card debt during the post-pandemic reopening.
Key Points:
- Update your budget or create a new one that reflects your financial situation post-COVID.
- Keep in mind that inflation will increase the price of some goods and services so you may need to cut back or eliminate some line items in your budget.
- Keep up with your credit card payments in full each month to avoid credit card debt.
Start by updating your existing budget or creating a new one that matches your needs and income level. Your priorities may have changed during COVID and that needs to be considered when laying out your budget.
If you are still struggling to find a job or had to take a job below your previous income level, you may need to cut back on line items you had before the Pandemic. You can still budget while unemployed, but it may take some intense cutting back on your bills. Don’t forget you can cut back on both essential and non-essential items to make your budget work.
These tips may help you to protect your wallet as things start opening back up:
- Take it slow. It’s tempting to blow a lot of money spending time with friends and family you haven’t seen in a while, but it’s not worth going into credit card debt. Start slow by sticking to your budget when deciding on activities with your loved ones.
Can’t resist splurging? Just make sure you stick within your budget. A budget should be flexible; all you need to do is cut back on other line items. If you have savings, you can dip a little into those funds as long as you can reimburse the money spent quickly. Using all of your savings can leave you open to accumulating debt in the event of an unexpected bill. - Don’t forget to save. If there’s one thing to learn from a Pandemic, it’s to expect the unexpected, especially when it comes to finances. Be ready for changes in income or unexpected medical bills with an emergency fund, especially if you had to dip into your savings during the Pandemic. Include a line item for savings in your budget, if possible.
It may be harder to save if you’re unemployed but it may not be impossible. Even a little contribution each month can make a big impact in the future. If you have the right account, your money can grow even during months when you can’t contribute to your emergency fund. With federal unemployment benefits quickly ending, it will give you security to have some money in your emergency fund. - Be aware of inflation. If certain items have increased in price significantly, you may need to eliminate them from your budget. You can add the line items back in if or when the prices decrease. In the meantime, you can find some alternatives that are more consistent with your budget.
The world changed during the Pandemic, causing prices of many goods and services to increase. If you haven’t purchased a certain good or service in a while, you may need to do some research into how much that product now costs. You may need to cut back on other expenses to allow it to fit in your budget. - Don’t fall behind on your credit card debt. Because of interest rates, falling behind on your credit card payments will only increase your debt. If you are already in credit card debt, it may be to your benefit to address your existing debt before adding to your credit card bill. Getting your credit card debt under control can save you money in the long run.
One of the best ways to avoid falling behind on your credit card debt is to resist paying only the minimum each month on your credit cards. You should pay your bill in full every month if possible or the remaining balance will be charged interest, costing you more than what you originally spent. If you can’t cover your bill in full each month, pay as much as possible to keep your interest rate lower.
If you’ve seen your credit card debt increase during the COVID-19 Pandemic, ClearOne Advantage can provide relief. Contact one of ClearOne Advantage’s Certified Debt Specialists at 866-481-1597 to discuss your best debt relief options and get a free savings estimate today.
