For many consumers, January is the hardest financial month of the year. The market predictions for 2023 provide scant hope, suggesting that there are further storms ahead.
While concerning, the situation is by no means hopeless, and by making smart and proactive decisions now, businesses and consumers can be better prepared to navigate the perils ahead.
If consumers are to survive the long, expensive month of January, and the year beyond it, the ideal is to have prepared in advance, says TransUnion CEO Lee Naik. However, if preparation season passed you by and you’re struggling going into February, all is not lost.
“While quantifying the total stress on your wallet and accepting that you need to take action are the first and most important steps, there are several things that consumers could and should do to manage their debt now and position themselves better for the future.”
Naik shares the following five tips to help alleviate financial strain in the year ahead:
1. Protect your credit score by making debt payments on time so that you can still access credit in the future. Your payment history, including whether you have paid your bills on time, plays the biggest role in calculating your credit score.
2. Never stop paying your bills – talk to your bank and other lenders early and often, and arrange payment plans with them should you experience financial strain. Be sure you understand what is required of you – and what they expect in return.
3. If you are running out of money before you run out of month because you’re struggling with debt payments, another option would be to ask your credit provider if they can help you with a payment holiday or other accommodations. You’ll still owe the money, and the interest that the loan attracted, but you can take a breather from payments for the agreed amount of time without any negative consequences on your credit record.
4. Make sure you know the full extent of your financial commitments and credit health, and learn what you can do to improve your credit score. TransUnion offers all consumers one free credit report each year – and pulling this report yourself won’t affect your credit score in any way.
5. Check the terms and conditions of your credit products to see if you have credit insurance. This will help you address your credit portfolio if you have been retrenched or have had to take unpaid leave.
Questions may be edited for brevity and clarity.
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