Managing Your Finances During a Crisis

The Coronavirus is not just a threat to our health, but for many it’s now effecting our finances. It’s challenging to manage our bills and save money in everyday life, but even more difficult in these current times. Federal assistance is anticipated, but that could take time. So many people are worried about how to survive financially. Here are some tips to help you manage your finances.  

Alternative Income:

If you are out of work or had your hours reduced, you’ll need to find alternative income. These alternative ways may be less money than you were making before, but it’s important to continue to have a flow of income.

  • Despite some businesses shutting down, others are now hiring. Apply for a job(s), even if its outside your work field
  • Use your special skill(s) as a means for additional income (crafts, cooking, etc.)
  • File for unemployment benefits.

Stay current with your credit cards:

If you have credit card debt, this may be a good time to consider your options:

  • In an effort to stay current on payments, pay the minimum amount due on your credit card(s). If you don’t make at least the minimum payment you may incur fees and additional interest. It could also negatively affect your credit score.
  • Consider a balance transfer, this allows you to transfer your balance from a high interest card to a card that charges zero interest for an introductory period. With a balance transfer, you may be able pay down or even pay off the balance before the zero-interest rate expires. Typically, a higher credit score is required to qualify for such a card.

Negotiate with your creditors:

With any debt (mortgage, rent, auto loan, service providers, etc.) notify you creditors immediately of your hardship. It’s important that you make the creditors aware of your situation.

  • Don’t delay, if you’re worried about being able to make your housing payment. Contact your lender or landlord to discuss payment options. The same goes for business owners for their offices or store locations.
  • Communicating with your creditors is key. You can call, but even better email the company so you have documentation of what was agreed upon.
  • Inquire what options are available to you. Do they offer payment plans or defer payments?
  • It never hurts to ask and with the current situation there’s a good chance the creditor(s) will work with you.

Relief Programs:

Check what relief programs your county offers.

  • During the crisis, some utility companies have agreed to suspend utility shutoff’s for customers with unpaid bills. Other counties are postponing rental evictions.
  • These programs are temporary, to offer some financial relief.
  • It does not void the debt and consumers are encouraged to continue to make their payments.

Tax Deadline:

The IRS is offering some financial relief by postponing the federal filing and payment due date. 

  • The IRS has extended the federal tax filing due date to July 15th.
  • If you owe money you won’t be required to make payment until July 15th, without penalties and interest, regardless of the amount owe.
  • The automatic federal filing and payment relief applies to all taxpayers.
  • If individuals need additional time past the July 15th due date they can request an extension through the IRS.
  • For more information on tax filing and payments visit www.IRS.gov

Student Loans:

Many of us may be wondering what to do about your student loans during the COVID-19 pandemic.  A new law is expected to take effect this week giving many a break from payments.

  • The new law will allow you to stop making payments on most federal student loans for six months, starting April through September 2020.
  • No new interest will accure, which means at the end of the six months, you’ll owe exactly what you did at the start.
  • If you’re current on your payment and want to continue making payments, since no interest will accrue your payment will apply towards the principal. Resulting in paying off the loan faster.
  • If you are working towards Public Service Loan Forgiveness, good news, the no payments for six months will count towards your Public Service Loan Forgiveness timeline.  That means you won’t have to make payments for extra months, past the time you planned to get forgiveness.
  • The federal relief programs do not apply to borrowers with private student loans. You should contact your lender to find out what loan modification programs they offer.
  • Until the bill becomes law, it’s recommended that borrowers continue to make their student loan payments.
  • A six months break from payments, will allow you to allocate that money elsewhere. As an alternative, consider starting or adding to an existing emergency fund to use for essentials like food and housing during this critical time.

Reevaluating your budget:

We’re used to having what we want when we want, but during this time of crisis we must be smart about how we spend our money. Now is the time to evaluate our WANTS and NEEDS.

  • Start with a budget: list EVERYTHING you spend money on and your total income. Food and housing should be a top priority.
  • Identify the items that qualify as wants: subscriptions, take-out food, clothes, electronics, cable, salon services and cleaning services.
  • Eliminating these items doesn’t have to be permanent, just temporary to allow us to allot that money elsewhere; especially if your income has been reduced.
  • Many counties have implemented a “safer-at home” order, which has financial pros and cons. Non-essential businesses are required to temporarily close and many of us are now working remotely. This new norm provides some automatic savings; not having to commute saves on gas and the closure of some business limits us for eating out or spending money at the salon. Another savings for many parents is childcare.
  • On the other hand, we’re now spending more time at home, resulting in using more electricity and water. We also may be tempted to do more online shopping for non-essentials or spend money on food delivery.