How to Get Your Finances Back on Track After the Coronavirus Crisis

If you were affected by the economic turmoil that resulted from the impacts of the global pandemic, you can take steps now to regain control your financial life with these 6 steps

Couple Going Over Financial Paperwork

by NEA Member Benefits

Apr 18, 2022

Many of us are likely glad to see some return to normality as the pandemic ebbs. The economy is recovering, however labor shortages, supply-chain disruptions, inflation, and global tensions and uncertainty are holding back a full return to normal. So now could be a good time to reassess your finances, getting them back on track, or preparing for future setbacks. 

Here are some tips on how to do so.

Find mortgage and student loan relief

Government relief programs throughout 2020, 2021 and into 2022 provided a respite from payments on government-backed mortgages and federal student loans, but these have mostly expired. The expectation now is that bills that were postponed are coming due.

Interest on your mortgage continued to accrue during the extended forbearance period, and you’ll need to make up these paused payments. Contact your mortgage servicer to find out what your options are.

Payments on federal student loans were also suspended and interest waived through May 31, 2023, barring further extensions. If you will have difficulty keeping up with resumed payments, check out various federal repayment programs. An income-driven plan, for example, ties your monthly payments to your income and family size, potentially reducing them to $0. Learn about your repayment options at the NEA Student Debt Navigator.

Government relief didn’t apply to private loans, but you can still reach out to your loan servicer to see what options are available if you’re struggling with payments.

You might also want to take advantage of interest rates that are still relatively low to reduce your payments and borrowing costs by refinancing your private loans through the NEA Student Loan Refinance Program. The program, in partnership with College Ave Student Loans, allows you to select a loan term from 5 to 15 years so you can choose what works best for your budget. You can also receive a one-time credit of 0.5% of your loan amount (up to $599.99) and get a 0.25% interest rate reduction when you enroll in auto pay.

Check your credit reports to ensure accuracy

You’re entitled to a free credit report each year from one of the three major credit reporting businesses—Equifax, Experian and TransUnion—at But during the pandemic, the three bureaus waived this limit, and you can now get a free online report weekly from each through the end of 2022.

Review your reports to make sure there aren’t any errors there that could affect your credit score, which is a critical number used by lenders to quickly assess your creditworthiness.

Certain relief offered to borrowers during the pandemic, such as mortgage forbearance and suspension of federal student loan payments, are not supposed to appear as negative marks on credit reports. Nevertheless, some borrowers complain that this relief was misreported, damaging their credit scores.

Dispute these or other errors on your credit report with the credit bureaus and the business that provided the inaccurate information. The Consumer Financial Protection Bureau provides a step-by-step guide on how to do so.

Take steps to build a better credit score

Despite the pandemic-induced recession and ensuing economic impacts, the average FICO Score—a widely used measure of creditworthiness—reached a record high of 714 as of September 2021, which was up from September 2020’s average of 710, according to Experian. (Scores range from 300 to 850; the higher the better.)

Why the increase? Fair Isaac Corp., the creator of the FICO Score, says financial relief measures, including enhanced unemployment benefits, stimulus checks and payment accommodations by lenders, all helped consumers avoid falling behind on bills. Plus, credit card balances also dropped early in the pandemic as consumers cut back on spending.

Now that stimulus checks and most other relief efforts have ended, try following these tips to maintain a good credit score or improve yours:

  • Pay bills on time, which accounts for 35% of your FICO score.
  • Reduce debt on credit cards and other revolving accounts because 30% of a FICO Score is based on your credit utilization rate, which is how much of your available credit you use. The less, the better. Aim to use no more than 30% of your total credit limit.
  • Don’t close credit card accounts you’re not using unless it costs money to keep them open. Keeping unused accounts open increases your total credit limit and improves your credit utilization rate. 

Dig yourself out of debt

You likely didn’t accrue debt overnight, so it can take some time to reduce it. Start with the most costly debt, which is generally credit cards. For example, the average annual percentage rate (APR) on new credit cards is increasing and is now between 18% and 19%. But your APR could be more than 20% if you have a weak credit score.

A popular way to eliminate debt and save on interest is called the “avalanche method.” That’s where you put extra dollars toward repaying the card with the highest interest rate while making minimum payments on your other cards. Once the first card is paid off, you put the extra money toward the card with the next highest rate, and so on until the debt is wiped out.

But if you need the psychological boost that comes from eliminating some debts quickly, try the “snowball method.” Simply apply extra money to the card with the smallest balance first, regardless of the interest rate. When that’s paid off, you tackle the card with the next lowest balance, and so on. The snowball method won’t necessarily save on interest, but it can keep you motivated.

Alternatively, you can take out a personal loan to pay off high-interest card debt. For example, with an NEA Personal Loan through FNBO, you can borrow up to $30,0001 and consolidate your debt into one monthly payment at a potentially lower fixed-for-life rate. Just make sure that if you take out a loan to pay down debt, try not to rack it up again.

Create or replenish an emergency fund

The benefit of emergency savings became evident during the pandemic when workers struggled to keep up with bills after a job loss or reduced hours. The general rule is to keep between three and six months’ worth of living expenses in an easily accessible savings account for emergencies. But the right amount for you will depend on your job security and if you have other reliable household income.

For example, a dual-income couple may need only the standard three- to six-months’ worth of living expenses in an emergency fund. Yet a sole wage earner may need double that. Workers in stable industries may be able to get by with enough savings to cover two to four months’ worth of expense, while those with jobs that are at risk in economic downturns may want to stash away nine months or so of expenses.

Building an emergency fund can take time, but regularly stowing away small amounts can help it grow to a sizable sum over time. For example, saving $50 a week will amount to $5,200 in two years.

To help you find the money to fund that account, try this interactive budget worksheet—Build Your Budget in 6 Easy Steps—created for NEA members. 

Consider bankruptcy as a last resort

Filing for bankruptcy can provide a much-needed fresh start and stop creditors’ calls. But it’s often referred to as a solution of last resort because of the repercussions. Depending on the type of bankruptcy filing, you may have to forfeit your house and car. You generally can’t wipe out student loans in bankruptcy. And a bankruptcy will stay on your credit report for seven to 10 years.

Before bankruptcy, try negotiating with creditors on a solution. Many credit card issuers, for example, offer hardship programs that may waive fees, lower your interest rate or reduce minimum payments.

Also consider working with a nonprofit credit counselor. Counselors can help with budgeting to make your finances manageable. They can also negotiate with your creditors to come up with a debt management plan for you. You can find a nonprofit counselor through the National Foundation for Credit Counseling.

1The NEA Personal Loan cannot be used to pay postsecondary educational expenses or tuition or to consolidate postsecondary educational loans.

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