The Coronavirus has made American families’ financial futures extremely volatile. In an attempt to slow the spread of the disease, state-mandated shutdowns of nonessential businesses have had a major impact on the finances of both individuals and businesses, resulting in millions either having their hours cut, being furloughed, or losing their jobs altogether.
Since mid-March of this year, there have been some staggering numbers associated with the economy and the number of jobless claims nationwide; $26.4 million jobless claims since mid-March to be exact. That’s 15% of the U.S. workforce.
If your family has been affected by this pandemic, with reduced or lost paychecks, it’s critical to reevaluate your budget, and look for ways to save money during uncertain times.
Here are some ways to help you make smart financial decisions:
Take Advantage of Every Opportunity
First of all, you must avail yourself of every economic assistance program available to U.S. citizens. For some, that may be enough to get you through this uncertain period. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides for Economic Impact Payments to American households of up to $1,200 per adult for individuals whose income was less than $99,000 (or $198,000 for joint filers) and $500 per child under 17 years old – or up to $3,400 for a family of four. There are also expanded Unemployment Insurance benefits offered to those who have lost their jobs as a result of the pandemic, which supplements state benefits with an additional $600 a week, which more than doubles the weekly maximum unemployment benefits in most states.
Don’t Make Fear-Based Decisions
You must try not to make decisions out of fear. Fear is an emotion, and it’s never wise to make important decisions when in a highly emotional state. Wait until a time when you and your significant other can discuss the specifics of your situation with facts. Focusing on facts will help you make better, more thought-out decisions. Making important decisions in an emotional state will lead to knee-jerk decisions that may be regrettable.
Think Long-term for Major Decisions
Another important factor to take into consideration with your partner is to think of the long-term when you’re making important decisions. A decision made now to address an immediate issue may seem like the right one but put thought into the long-term ramifications. For example, moving; maybe you could move to a less expensive area or in with family if your income has become impacted right now, how would that affect your family’s long-term future? Are there job opportunities in that area? How would it impact your children? These are just a couple of examples of how you should take the short-term and long-term into consideration.
Communicate
During times of uncertainty, it’s even more important for couples to keep the lines of communication open. This will help you both stay on the same page about what your short and long-term strategy is, and help alleviate one another’s concerns.
Look Into Mortgage Forbearance
If you have a federally backed mortgage and have been affected by the pandemic, the CARES Act gives you the right to forbearance for nearly a year if you request it. You can ask for 180 days initially as well as an additional 180-day extension. Most mortgages are federally backed, including those lent or guaranteed by Fannie Mae, Freddie Mac, the Veterans Administration, the Federal Housing Administration, and the U.S. Department of Agriculture. If you have one of these mortgages, you won’t have to pay back the skipped payments all at once. You could spread out the payments or tack them on to the end of your loan. To find out if you have a federally backed mortgage, and to request forbearance, contact your mortgage servicer. Even if you don’t have a federally backed loan, you probably will have some forbearance options. Make sure you understand how each program works and how you would repay the skipped payments. In most cases, your balances will continue to accrue interest, but the programs could give you some breathing room while you wait for better times.
Combine Checking Accounts
If you haven’t done so already, then couples should consider combining their checking accounts, so each person has a clear picture of your family’s funds. Knowing this will prevent confusion about finances and prevent potential disagreements. Couples must be on the same page when dealing with uncertain circumstances.
Cut out Unnecessary Subscriptions
An easy way to find more money in your budget is to scale back subscriptions that you either don’t use or have stopped using as much, such as streaming services or meal subscriptions. Just examine recurring charges on your bank statement or credit card and find the things that you can live without. Many people have 1-3 subscriptions for streaming-based services alone. Do you need Netflix, HBO, and Hulu? Maybe you can go without two out of three for the time being.
Scale Back Cell Phone & Insurance Plans
Regarding cell and insurance providers, it makes sense to shop your rates every year anyway. Contact your cell phone and insurance providers and see if you can get your rates reduced. If you’re at home, do you really need as extensive of a cell phone plan at the moment?
In regards to auto insurance, many insurers are cutting premiums anyway, because people are not driving anywhere near as much. If you haven’t been offered a discount, call your provider and inquire about it, and if they don’t budge, look elsewhere.
Consider a Temporary Job Doing Work that is In Demand
Even if you or your spouse has been laid off or had hours cut back, there are still some temporary jobs that are actually extremely busy and are hiring. Things like grocery shopping, delivery, or being a virtual tutor are all things that you could get started doing within days, which can help supplement lost earnings until things begin to normalize again.
Renegotiate Your Bills
Loans. Water bills. Gas and electric bills. Credit cards. Mortgages. Many bills just keep coming every month. The good news right now is because of the Coronavirus, many are willing to either temporarily renegotiate terms or provide forbearance programs for their customers. Make a list of every bill your family has, and contact each to see if you can find some financial relief by reducing your monthly obligations -- or even get a stay for a few months.
Food
Outside of housing, and transportation, food is probably the biggest expense for many families. The one positive -- for your budget -- is that the option to eat out (and potentially overspend) right now is not there, meaning you’re probably saving money. Skip takeout and keep it simple when grocery shopping. Take-out is still an option, but if you find yourself doing this too frequently, start cutting back. Tips and delivery/service fees add up, and your food budget could balloon out of control. Be aware of this, and try to keep your grocery shopping simple.
Emergency savings
If anything can be said with absolute certainty about Coronavirus, it’s that it is an emergency -- in every sense of the word. If your family has been impacted financially by this pandemic through lost wages, or a job loss, and you do have some emergency savings put away, this is the time to use it. That’s what that fund is there for and if you find yourself in a position that necessitates using it, by all means, do.
Get Help With Debt Relief During the Coronavirus Pandemic
Dealing with debt at this time can be an immense challenge. Of course, if you find yourself extremely compromised with debt or simply feel overwhelmed and not sure of the best course of action, we can help you. Financial Rescue has helped tens of thousands of people resolve hundreds of millions of dollars in debt over the last eleven years. These are precarious times and it’s natural to feel anxious. Feel free to call us for a complimentary, no-obligation consultation. We are also offering flexible and discounted programs to all Frontliners through the end of June!