How To Rebound From a Bad Financial Year: 2020 Edition

·5 min read
RichVintage / Getty Images
RichVintage / Getty Images

Many Americans toasted the end of 2020 and woke up in 2021 realizing that while the end is in sight, we still have a long way to go to conquer the pandemic and right the economy. You may be one of millions of Americans who lost their jobs, closed a business, faced unexpected expenses or experienced some other major loss due to COVID-19. The first thing to know is this: You are not alone.

Even more comforting, you still have the power to achieve financial freedom despite the setbacks of last year. With a little effort, you can shore up your budget, reduce your expenses and manage your financial recovery. The following short list of actions you can take right now will help you improve your financial health this year.

Last updated: Jan. 20, 2021

lechatnoir / Getty Images
lechatnoir / Getty Images

Listen To the Experts

One of the easiest steps to take costs nothing but time and could save you a lot of money in the long run: Take advice from people who know what they’re talking about. Personal finance podcasts like “Afford Anything,” “Women & Money,” “Brown Ambition” and “Future Rich” put some of the world’s foremost experts on the subject within your reach — and it costs nothing to listen. Likewise for YouTube channels like “Wealth Hacker” and “BeatTheBush” — and those are just a few.

Do some research, ask your Facebook friends what they like and subscribe to a few shows. Make your time pay by spending it listening to experts who specialize in solving the exact kinds of problems you’re experiencing.

Moyo Studio / Getty Images
Moyo Studio / Getty Images

Confront the Reality

It’s natural for people who are behind on their finances to block it all out because it feels too overwhelming to deal with — natural, but unhelpful. Only by staring the beast in the eye can you begin to create a strategy on how to defeat it.

Consider an app like Mint, which unifies your entire financial life under one site. That includes your income, credit cards, subscriptions, bank accounts, loans, investments, retirement accounts and all the rest. You’ll get a clear picture of what’s coming in, what’s going out, which debts are most dire, which expenses are costing you the most and what changes need to be made. Conquering the crucial psychological barrier of confronting the situation is the first step to changing it.

©iStock.com / iStock.com
©iStock.com / iStock.com

Consider a Personal Loan

If 2020 put a squeeze on your finances, it’s likely that you dinged up your credit cards along the way. High credit card balances greatly impact credit scores, and once it builds up, digging out from under can take years or decades.

Consider taking out a personal loan to pay it all off at once. With a personal loan, like one through Discover®, you’ll enjoy the freedom of owing just one lender, paying just one set regular monthly bill and knowing exactly how many payments you have left. A Discover personal loan comes with annual percentage rates from 6.99% to 24.99%, so you could eliminate higher-rate debt, which could save you hundreds – or even thousands – of dollars on interest.

PredragImages / Getty Images/iStockphoto
PredragImages / Getty Images/iStockphoto

Investigate Your Autopay Bills

You might be bleeding financially from slow, steady drips that you’re not even aware of in the form of recurring withdrawals that you forgot about or never intended. Everything from mindfulness apps to streaming services, for example, come with free trials. When the trial period ends, the service kicks in at full cost — but people often forget that they ever started the trial at all and wind up with phantom monthly auto-withdrawals.

Other surprises can pop up when introductory rates end, like the kind that come with premium TV channels and internet service. You’ll get a great deal for a few months or a year before the full price kicks in, causing hard-earned cash to seemingly just disappear.

Be Aware: 31 Hidden Ways You’re Bleeding Money Every Month

pixdeluxe / Getty Images
pixdeluxe / Getty Images

Revisit Your Subscriptions

When you investigate the autopay bills that come out of your checking account every month, you’ll likely notice that you’re signed up for more subscriptions than you knew and that there’s more overlap than a sensible budget can allow.

Cord-cutters, for example, might subscribe to a number of streaming services for different reasons. Having multiple subscriptions of similar services, however, is hard to justify when times are tough.

With the money you save by cutting some items, you can make extra payments on your debt. If you consolidate your high-interest debt with a personal loan from Discover, you can make your debt more manageable. And with the extra money you save by cutting out subscriptions, you can pay that debt down quicker. Finding multiple ways to tackle your debt can only help you succeed sooner.

bernie_photo / iStock.com
bernie_photo / iStock.com

Apply For a Balance Transfer Card

Although it seems counterintuitive, you can also attack credit card debt by taking out another credit card — one designed specifically for balance transfers. These cards offer introductory rates with 0% interest. When you’re approved for the card and transfer your existing debt, that debt doesn’t go away, but it does stop accruing interest. This way, you can put that debt on the back burner for a year or more, making only the minimum payment, while you make a run at any other debt you might have or try to save more money.

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This article originally appeared on GOBankingRates.com: How To Rebound From a Bad Financial Year: 2020 Edition

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