Staying Financially Healthy in a Global Pandemic
The past few months have been a wild ride. COVID-19 went from being a nuisance and an international news story to being in our backyards and something that directly and significantly impacted our daily lives. Events were cancelled, local businesses closed their doors, and voting was delayed. The lines for coronavirus testing wrapped around the block at the Cleveland Clinic in mid-March.
It’s hard not to feel helpless and overwhelmed. I wanted to share some very real and immediate ways that you can take charge of your finances during this time of uncertainty.
1) Make every effort to continue paying bills normally if your income is steady. While there’s a moratorium on evictions, utility shutoffs, and submissions to collections, this does NOT mean you have a free pass. It’s important to realize that once those moratoriums are lifted, you’ll still owe those payments. Instead, if you’re able to, continue paying bills as normal. Now here’s the important part—if you aren’t able to pay those bills, be proactive. Rather than simply skipping payments, reach out to providers and servicers to request assistance. They may be able to put you on an alternative payment plan or forgive missed payments. Communicating with them is your best chance to take advantage of any help they’re offering right now. If you can’t get a hold of them right away, try paying at least part of the bill. They’re more likely to work with you if you haven’t already defaulted on payments.
2) How is your emergency fund looking? Bulk it up! If you don’t have at least 6 months of expenses saved in a liquid emergency fund, now might be the time to think of ways to save more money. This could mean cutting expenses, redirecting savings, or selling things you don’t need. Cancel subscriptions and memberships you don’t need (especially if you’ve lost income). As a bonus, you’re probably spending less money right now on eating out and entertainment (and transportation, and dry cleaning, and vacations, a host of other things). Take that money you’d normally spend and put it straight into a separate savings account. One you don’t see regularly; one you don’t touch unless you lose your income or have a major medical emergency. This won’t get you to 6 months of expenses overnight, but every penny counts when you find yourself needing this type of fund. Aim for 1 month of expenses first, and then work your way up.
3) Negotiate your debt. Do you have an auto loan? Credit card debt? A mortgage? Contact your loan servicers to see if you can pause or adjust payments. If it’s credit card debt, see if they’ll suspend interest charges for a number of months—several large credit card companies have already said they’ll do this. If it’s a mortgage that is held by Fannie Mae or Freddie Mac, The Federal Housing Finance Agency has instructed mortgage servicers to allow for a suspension of payments. Importantly, once the forbearance period is up, you have to pay a lump sum of those deferred payments, but loan servicers have also been told to offer loan modification options at the end of the forbearance period to provide mortgage payment relief or help borrowers keep their payments the same moving forward.
4) Have a plan for your stimulus check. If you expect to get money from the CARES Act, think about what that money will be used for. If you don’t already have an emergency fund, you can guess what I recommend! But on the other side, if you have a large financial cushion, have not seen an impact on your income or job stability, and want to give back, that is also a wonderful plan. Consider spending some of that money to support local small businesses that have been hard hit by this pandemic and its economic fallout.
5) Find out if you’re eligible for unemployment. The requirements for filing for unemployment have been lessened for now. That means that if your hours have been cut, if you’re not working but expect to go back to your job after the Stay at Home Order ends, or if you’re self-employed or a contractor and you’ve seen your income affected, you likely qualify for unemployment benefits. When in doubt, apply!
It’s a stressful time for all of us, but if you take it one day at a time, it’s much more manageable. If you’re looking for more money tips, Fearless Finance® by Atwood Financial Planning is posting a series of daily advice on Instagram called “Fearless Finance: COVID Edition.” Follow us at @fearlessfinancebyafp to see those tips! And if you’re feeling completely overwhelmed by finances, reach out to me directly. I’m offering a free call with anyone who needs it to give my advice on your current situation. No sales, no strings. I can be reached at [email protected]. Fearless Finance® by Atwood Financial Planning is a fee-only, fiduciary financial planner. It means we charge clients by the hour and offer unconflicted, unbiased advice. We don’t sell products or earn commissions. We’re here to help.
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