Could the Coronavirus make your personal finances sick, too?
As COVID-19 (commonly called Coronavirus) affects more people globally and reaches pandemic proportions, financial markets have been volatile, losing as much as 10% of their value in a single day. With the travel industry being affected due to quarantines and people being afraid to travel to areas of high infection, manufacturing facilities being closed in quarantined part of countries, and restaurants experiencing a downturn in the number of people eating out, the impact of COVID-19 (like the virus itself) is spreading rapidly.
Unless you’ve already seen your hours cut, or are caught in the hiring freeze that many major airlines have already instituted, you’re probably asking, “could the Coronavirus cause financial hardship?”
If concerns about a global recession hold true, then the simple answer is: probably. While your specific financial situation is unique, there are several factors that could make it more difficult for you if you already have high credit card debt. Those factors include:
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Loss of income
This could take several forms and has already started to affect some workers in the U.S. not just around the world. Perhaps you’ll have the number of hours you work cut because there are no customers to serve. Maybe there’s a decreased demand for what you manufacture because there are no materials coming from China for you to use. It could be that your side hustle as a ride-share driver has dried up because no one is venturing out to be part of a crowd. Or you might even become ill and have to take a significant amount of time off work.
Whatever the reason, a loss of income makes it harder and harder to keep up with the bills you have. And those bills won’t stop coming. So, you’ll probably be playing catch-up and may even need to find a side hustle to your side hustle.
The most distressing way to lose your income is to lose your job entirely. If a recession takes hold, and the rise in corporate debt levels continues, companies often look to cut expenses. And that often means cutting jobs. When you have no job, staying on top of your monthly bills becomes an impossible task, and credit card companies will continue to pile fees and interest on top of what you already owed.
Loss of home value
With investors being concerned about stocks, hesitancy to invest in new home construction usually follows. The investors don’t think people will have the confidence or the cash to buy new homes when the overall economy is facing difficulty. And with no one buying homes, the value of homes decreases, which means you could owe more than your home is actually worth no matter how long you’ve been paying the mortgage.
If you happen to lose your income or your job in conjunction with the loss of your home’s value, your lender will still expect you to make your mortgage payments month after month. And they’ll expect you to pay on the value of the mortgage, not a depressed value of your home that reflects current market conditions. If you don’t, they’ll foreclose on your home. So, when you have high credit card debts, an upside-down mortgage payment and less income, that’s definitely a financial hardship.
Loss of retirement savings
When individual stocks and overall markets drop radically, it’s probable that anything you’ve invested in a retirement plan also drops. That means you’re losing the security you thought you had put in place for the day you could finally stop working fulltime. It also means that you’ll end up working for more years, unless you can find a way to get out from under the other debts you owe such as your high credit card bills.
Overcome financial hardship
If you’re already facing a financial hardship or are concerned about what COVID-19 could do to your financial situation, you should get in touch with one of the certified Debt Counselors at CreditAnswers.
CreditAnswers has helped people just like you from all over the country get on the path being debt-free. In fact, we’ve helped clients pay a lot less than they originally owed on their debt. Our team of certified Debt Consultants can help you keep more money in your pocket each month, pay less overall than you could have imagined, and be free from high credit card debt in 24-36 months. And CreditAnswers’ success is based on your success. So, if they don’t settle your debts, you don’t pay anything.
Avoid the fear and uncertainty of what financial hardships might be coming. Get in touch with CreditAnswers today.