In 2019, it was reported that nearly one-fifth of working adults in the U.S. had no money set aside to cover unexpected expenses. This same report also revealed that 31% of adults have less than $500 set aside for these expenses. The coronavirus pandemic has undoubtedly exacerbated the problem, leaving millions of people unemployed and unable to make ends meet.
If you’re experiencing financial hardship—regardless of whether or not it has been caused by the coronavirus crisis—it’s important to know what to do to improve your situation. Here’s what you need to know:
What Are Examples of Financial Hardship?
A financial hardship occurs when you are no longer capable of paying your monthly bills. Many different factors can cause or contribute to financial hardship, including:
- Suffering a serious injury or illness
- Caring for a loved one who has suffered a serious illness or injury
- Losing your job
- Receiving a pay cut or fewer hours at work
- Divorcing your spouse
- Losing a loved one who you were financially dependent on
- Natural disasters such as hurricanes, floods, wildfires, and tornadoes
These major events could negatively affect your finances and make it impossible for you to cover your monthly expenses.
How Do I Get Out of Financial Hardship?
It may seem like you will never make it to the other side of your financial struggles, but that’s not the case. Here are some steps to help you get out of financial hardship.
Conduct a Detailed Review and Adjustment of Your Budget
The first step in regaining control over your finances is a thorough review of your household budget. This survey isn’t just about noting your income and expenses; it’s about identifying areas where you could potentially cut costs or increase income.
- Income Assessment: Look at all sources of income, not just wages. This could include part-time jobs, side businesses, rental income, or government assistance.
- Spending Evaluation: Evaluate your spending habits and differentiate between needs and wants. Needs are the absolute necessities, while wants are the extras.
- Expense Trimming: Reduce or eliminate discretionary spending, such as dining out, hobbies, or entertainment.
- Debt Analysis: Understanding your debt, including mortgages, student loans, car loans, credit card debt, can help you develop a plan to reduce it.
Writing a Financial Hardship Letter to Your Creditors
The aim of a financial hardship letter is to communicate with your creditors about your financial trouble and request temporary leniency or adjustments to your payment plan. It’s important to be honest, concise, and clear in your communication. Here’s a basic structure you can follow:
- Header: Your name, account number, and date.
- Introduction: State your request, the cause of your financial hardship, and the steps you’re taking to overcome it.
- Body: Highlight your income, expenses, and other financial commitments.
- Conclusion: Recap your request and state your plan to get back on track.
Earning Extra Income with Side Jobs: Comprehensive Opportunities for Financial Progress
Generating extra income is an effective means of improving your financial position and mitigating the impacts of financial hardship. Let’s delve deeper into some popular options:
Freelancing: Leveraging your unique skills
Freelancing has emerged as a versatile and profitable avenue for income generation. It is the perfect opportunity to capitalize on your unique skills such as writing, designing, or programming. Renowned freelancing platforms like Upwork or Fiverr offer many categories for freelancers to offer their services.
- Writing: From content writing, copywriting, technical writing, to scriptwriting; the demand for writing services is high. If you’re gifted with a way with words or specialize in a particular writing style, consider offering your skills for pay.
- Designing: This encompasses a broad range from graphic design, UI/UX design, product design, to interior design. If you have a creative streak and the technical skills to match, design services could be a profitable sideline.
- Programming: With the digital boom, there’s a constant demand for app developers, web developers, or software engineers. If you have the know-how of coding languages, freelance programming could be a high-earning venture.
Delivery Services: Exploiting the gig economy
The gig economy’s advent has created flexible job opportunities, particularly in the realm of delivery services. Companies like Uber Eats, DoorDash, and Postmates offer app-based work delivering food or goods.
- Food Delivery: With the surge in online food ordering, signing up as a delivery partner with companies like Uber Eats or DoorDash can be an effective way to supplement your income.
- Grocery Delivery: Many consumers resort to online grocery shopping for convenience. Companies like Instacart enlist personal shoppers to pick and deliver groceries to customers.
- Parcel Delivery: Companies like Amazon Flex allow you to earn income by delivering packages to customers.
Online Tutoring: Monetizing your knowledge
If you have a knack for teaching and solid command over a subject or several, online tutoring can be a great source of extra income. Platforms such as Chegg Tutors and Tutor.com offer opportunities ranging from academic tutoring to teaching languages.
- Academic Tutoring: If you excel in subjects like math, science, English, or history, you can guide students who may need a little extra help.
- Language Tutoring: If you’re fluent in another language – from Spanish and French to Mandarin or Arabic – offering language lessons could be a profitable endeavor.
- Skills Tutoring: Be it guitar lessons, coding, or yoga classes – if you’re equipped with a specific skill, consider offering tutorials.
Other Side Jobs
Beyond freelancing, delivery services, and online tutoring, there are other side jobs to consider:
- Pet Sitting/Dog Walking: Platforms like Rover or Wag! can connect you with pet owners who need services.
- House Cleaning or Handyman Services: Offering cleaning or handyman services in your local area can be an effective way to generate extra income. Platforms like Handy can help connect you with in-need customers.
- Selling Crafts or Vintage Items: If you have a talent for making crafts or have a collection of vintage items, consider selling on platforms like Etsy or eBay.
In conclusion, the financial relief you need might be a side gig away, through pursuing freelance work, offering your expertise in tutoring, capitalizing on the delivery service’s rise, or other viable side jobs. With some research and effort, you could turn your skills, interests, or spare time into a lucrative income stream.
Canceling Unnecessary Subscriptions and Memberships
Recurring subscriptions and memberships can take a significant bite out of your budget. Ensure to review:
- Streaming Services: Multiple streaming platforms, such as Netflix, Hulu, or Amazon Prime, are often unnecessary.
- Gym Memberships: Consider cheaper or free alternatives like home workouts or outdoor exercises.
- Monthly Subscription Boxes: Products regularly delivered to your door can be enjoyable but are often non-essential.
If you’re experiencing financial hardship, you may need financial assistance in order to meet your monthly obligations. Fortunately, help is available in the form of a financial hardship loan.
There are many different types of loans that can be used to help you during a period of financial hardship. Personal unsecured loans are always an option. If you take out a personal loan, you will be expected to pay it back with interest within a certain period of time. Many lenders allow you to apply for personal loans online, but you may need to meet with your lender in person to finalize the terms of the loan.
A personal loan is a great option for people with good credit scores. But if your credit score is low, lenders may deny your personal loan application. Instead of agreeing to these terms, consider applying for a title loan.
A title loan is a type of secured loan that allows you to use the title to your vehicle, RV, or motorcycle as collateral. You won’t need to hand over the keys to your car in order to get a title loan. You are still in complete control of the vehicle—the lender will only take ownership of it if you fail to make payments on the loan.
Because you are using collateral to secure the loan, lenders will likely not put as much weight on your credit score when determining your eligibility. This means you may not have much trouble getting approved for a title loan even if your credit score is less-than-perfect. As long as you own a vehicle, RV, or motorcycle, you may be able to get cash quickly by applying for a title loan online.
The documents you will need to apply for a loan will vary from lender-to-lender. But in general, it’s best to start gathering these documents:
- Driver’s license
- Reliable, verifiable source of income
- Title to your vehicle (if you are applying for a title loan)
Talk to your lender to find out what else you will need to submit. By submitting everything at once, you can ensure that your application is reviewed and decided as quickly as possible.
What Happens If I Apply For Financial Hardship Loans?
Applying for a financial hardship loan may help you get the cash you need to make ends meet. You can use the cash from the loan for credit card payments, mortgage payments, utility bills, living expenses, or unexpected medical expenses. Despite this, it’s also important to note that unsecured personal loans or title loans may likely have a high interest rate. Given this information, individuals should consider all of their options before taking out a financial hardship loan.
Taking out a loan may impact your credit score. If you take out a personal loan, for example, the lender will check your credit history, which will put another inquiry on your credit report and may lower your score.
Taking out a loan could also improve your credit score over time. Making consistent, on-time payments on your loan may increase your score and help you build a strong payment history that other lenders will see in the future.
Make it Through This Challenging Time With Financial Hardship Help
Nearly everyone experiences financial hardship at some point in their lives. If you’re struggling financially, it’s hard to stay positive and see the light at the end of the tunnel. Although it won’t be easy, you can make it through this challenging time by following these tips.