16 Tips and Tricks for Securing Your Finances in the Time of Coronavirus
Take a deep breath. We are all in this together.
Greetings Talking About Money Community! How are you doing? No really, how are you doing?
This week I had a different blog entry that I was revved and ready to post, and then the world came screeching to a halt:
My kids got sent home from school, FOR 6 WEEKS
My husband’s company performed a stress-test of its remote log-in capability, AND THEN SENT EVERYONE TO WORK FROM HOME
I was able to amass extra food on hand, but I am anxious for what the grocery shelves are going to look like in the coming weeks when I attempt to do my shopping
My family is only a few days into our new world of social distancing, but we are already trying to create some new activities and routines:
We’ve pulled out the card table and started work on a 1,000-piece jigsaw puzzle (of puppies!)
We set up 4 workstations in various locations of our house so that the four of us can get some schoolwork/work-work done each day
I’ve instituted a daily mandatory one-hour “get your butt outside” rule
How are you adjusting to this new world of social distancing? Give a shout in the Comments section below and let us know how you are.
The realities of the world seem to be changing by the day (and sometimes by the hour). The current forecast is for a recession in 2020 and on March 17 Treasury Secretary Steven Mnuchin warned of a possible 20% unemployment rate. Let’s take a deep breath and discuss the 10 steps essential for you and your clients to shore up income, expenses, credit, debt, and assets in this brave new world.
Improving Your Income
Right now everyone is worried about your ability to work. If you are fortunate (like my husband), you were sent home to set up shop there with the assumption that your paychecks will continue for the foreseeable future. If you are a solopreneur (like me) you may have some work lined up that you can do from home (though my in-person classes and trainings have either be moved to online or put on ice for now). And those of you who work providing critical human services may still be on the job, though with enhanced cleaning protocols.
The big worry is for hourly workers who do not get paid when they do not work. I spoke with a client whose young-adult son works at Starbucks. If he gets sent home due to closing stores he will have a hard time contributing to his portion of their rent. Workers in the auto, hospitality, and transportation sectors are especially vulnerable to seeing their hours cut or their jobs eliminated.
So what should vulnerable workers do? Keep watching to see what Congress does: Over the weekend the House passed the Families First Coronavirus Response Act, and we are currently waiting to see how the Senate responds. If passed this bill would:
Grant two weeks of paid sick leave at 100% of the person’s normal salary, up to a $511/day cap
Provide up to 12 weeks of paid family and medical leave at 67% of the person’s normal pay, up to a $200/day cap
WIC will continue and SNAP will be expanded to provide additional support to working families
Note that this is for specific classes of employees. Those working for companies larger than 500 employees are not covered, and those who are self-employed (like me) will see a tax credit instead.
Eliminating Expenses
Most people manage their money in a process commonly known as “mental accounting.” That means that while they are aware of approximately what things cost (rent, monthly child care, a cart of groceries, a tank of gas), they don’t know exactly what they spend money on in a given month.
Well, March 2020 might just be the time to start tracking your spending! With “social distancing” being mandated in communities far and wide, this might be the time that you find yourself staying home and spending less. But if your or a household member’s work hours are cut, more effort might be required than simply staying out of the stores, restaurants, or bars.
Here are a few recommendations for eliminating expenses during trying times:
Utilize on-line bill pay to avoid late charges and fees
Cancel unnecessary subscriptions that you aren’t using anyway
If you have a Health Connector insurance plan and you do lose income throughout the year, make sure to report that income change here. (Also, as of March 18 the Families First Bill prohibits charging for testing and treatment of COVID-19, so don’t let the threat of a medical bill keep you or your clients away from the health care system.)
Consider reaching out to various service providers to request some help. Can you ask your landlord to work with you on the rent? Are local utility companies giving breaks on payment? If you make a monthly payment for an expense, consider inquiring what they are doing for their customers before paying the bill.
Creating More Credit
Serious times call for serious measures. If you believe that you might be in threat for a loss of income, enhancing your ability to borrow might be a good idea, even for the short term. If you think about it, access to credit gives you to ability to pay for necessary expenses in a pinch while you a making a more substantial plan.
In the short term, can you:
Can you qualify for a new 0% credit card?
Can you request a lower interest rate or an increased line of credit from your existing credit cards?
Dial Down Your Debt
Lenders know that many of their customers are in dire straits…or might be in the near future. On March 13 President Trump announced that student loan interest would be waived for the remainder of 2020, but beware the fine print: Borrowers are still to make their regular monthly payment (just know that the entire payment will be applied to the principal) and forget about the tax deduction on next year’s tax forms.
Take advantage of the current offerings to dial down your interest payments to the lowest rates possible:
Major credit card issuers are offering assistance to those customers who reach out and request it. The expenses that keep your household afloat – like housing, utilities, food, medicine, and transportation – are paramount at times of a crisis. Take advantage of offers that credit card issuers make to help you make your credit card payments.
If you think that you might have trouble making your car payment, see this advice from the Consumer Financial Protection Bureau (CFPB).
Are you in a position to refinance your mortgage in light of the historically low interest rates?
Mortgage servicers are extending hardship forbearance to those who are being affected by the coronavirus. Reach out to your lender if you are in threat of not being able to make a mortgage payment.
Adding to Your Assets
Remember how financial capability professionals are constantly talking about the importance of emergency savings? Of course you do. Do you have a stash of emergency savings that you can count on? I hope so.
To add to that amount:
Remember that spending that you are not doing right now? Transfer that amount from your checking account to your savings account to keep it out-of-sight, out-of-mind.
Are you anticipating receiving a tax refund this year? Direct deposit that amount to your emergency savings account too.
With the incredible volatility of the stock market starting in late February, I heard some young investors who were taking their money out, opting to protect what was left of their principal rather than risk losing their precious burgeoning nest egg.
While the instinct to avoid future loss is completely reasonable, it really will help you in the long run if you stay the course and keep up your contributions to your 401(k) or 403(b). Get some solid more solid advice on retirement saving here.
For the foreseeable future, Community member, please remember to check in on your neighbors, hang close with your loved ones, and keep washing your hands.