Apr 2

Apr 2 Pandemic Money Management: Simple, Yet Not Easy

With thought and intention you can manage your money through tough times.

Hello Taking About Money Community, how are you? No really, how are you?

It’s April 1 as I write this, and I just returned from my weekly venture to the grocery store to gather provisions for my family of four (where do my boys put all that food?). The scene at the grocery store gets more surreal as the weeks go by. Shoppers are all trying to do their best with social distancing, and the staff – boy, do I appreciate my grocery store staff! – are working their best to make sure that everyone is safe.

I made it home, left everything in my car for hours with the hopes that the virus would fall off (am I crazy?), tried to put my purchases away as safely as possible, and then wiped down my entire kitchen. Sound familiar?

Then I sat down to type this post and tried to tell myself, “Everything is going to be okay.”

I understand that I am lucky; in that going to the grocery store is the only time that I leave my neighborhood each week. I am working from home, and I still have paid work to do. I am not a health care provider, like friends of ours who are battling the pandemic on the front lines (they are the true heroes of this crisis). And so far our family, relatives, neighbors and friends are all healthy.

But I am worried. I am worried about who might get sick. I worry about who might lose their job. I am worried about the folks interviewed in a recent Boston Globe article who have already lost their jobs, who had been working paycheck-to-paycheck, and who have no emergency savings to get them through the next number of months.

Because while managing your money in the best of times might be a simple process of comparing what’s coming into your household versus what’s going out, managing your money under the stress of not knowing when you are going to get sick and/or lose your job is anything but easy.

But you can do this. I’ve got your back. Let’s take it one step at a time and look at the ways to increase what’s coming in and reduce what’s going out. These are steps to get you through the short-term, and they will turn into habits that get you through the long-term.

Improve Your Income

First off, you need to assess your landscape and determine every last place where you can earn a buck. This will come down to whether or not you are still working.

Are you still working?

Hopefully you are able to work from home right now. If you have to go in to work – be it because you work in health care or groceries or transportation – I thank you. Please be safe.

As for what might help right now, Congress passed and the White House signed the Families First Coronavirus Response Act. Help to workers includes:

Emergency Paid Sick Leave: Full-time workers get up to 2 weeks of paid leave, and part-time workers get a period of leave equal to the number of hours they work on average over a 2-week period. Payments are capped at $511/day for sick or seeking care, and $200/day for caring for a sick family member or children.
Family Medical Leave Act: This provides 12 weeks of job-protected leave if the employee is unable to work/telework due to childcare needs for kids under 18 whose school/daycare closed. The first 10 days of leave can be unpaid -- employees can request to use other available paid leave (such as Emergency Paid Sick Leave described above) and after 2 weeks, employees must be paid at 2/3 of their regular pay, up to $200 per day and capped at $10,000 per leave period.
Employer Hardship Funds: Check with your employer if they have such funds.
Side Hustles: Can you work from home to create some cash? Jobs to consider include online tutoring, administrative assistant, and customer service.

Have you been laid off?

If you have been laid off as a result of the coronavirus, I am so sorry. The CARES Act was passed on March 27. Here is what you need to think about:

Recovery Rebates: Refundable rebates are going to be sent out by late April (fingers crossed) to all tax filers. Married-filing-jointly making under $150,000 will be receiving $2,400, head-of-households making under $112,500 and singles making under $75,000 will receive $1,200. Kids under the age of 17 will each receive $500.
Unemployment insurance: You will qualify for your state’s unemployment insurance program, and the payment period will be extended from 26 weeks to 39 weeks. Also know that the waiting period for claiming UI has been eliminated.
Pandemic Unemployment Compensation (PUC): Through July 31 all regular UI claimants will receive their usual calculated benefit plus an additional $600/week for four months. Those eligible include self-employed workers (independent contractors, freelancers), workers seeking PT work, and workers who do not have a long-enough work history to qualify for state UI benefits.
SNAP: Additional funding is available as a part of COVID-19 response, and work requirements have been suspended. If you need help in acquiring food, consider this program.
Foundation Crisis Funds: Some charitable foundations have established crisis funds. Call your local 211 to learn more.

Securing Your Savings

Once you have thought through all you can do to open the spigots of possible income, you need to then turn your attention to your emergency savings. If you have emergency savings, good for you! If you are still working, please go ahead and keep contributing to your savings account.

And please people, do not go and take stacks of 20-dollar bills out of your local ATM! There is an untruth spreading about impending bank failure, causing people to take out way more cash then they need. Banks have FDIC insurance, and your account is insured up to $250,000. You’re fine.

If you are part of the 40% of Americans who do not have emergency savings, it is time to think creatively. Are you expecting a tax refund this year? Around three-quarters of tax filers do. Now is the time to wipe the slate clean from what you were originally planning to do with your refund, and to reallocate it to “coronavirus response” instead.

Creating Credit

While Cash is King, Credit might be called a Prince? Nevertheless, it is helpful in unprecedented times to line up ways in which to access funds if your stores of cash dry up. This leads us to considering ways to borrow in the healthiest way possible.

First, order your free credit report on annualcreditreport.com. Before you wander into the credit marketplace, please check your credit file for any mistakes that could leave you ineligible for any of the tactics described below.

Do you have a credit card? You might consider contacting your credit card company to request an increase in your credit limit. This will provide you with extra access to credit if circumstances turn dire.

Can you qualify for a new credit card with a 0% introductory interest rate? This too would give you access to needed cash without the threat of high interest charges in the future.

Do you own a home? Consider a HELOC, or Home Equity Line of Credit. This is essentially a credit card with a limit determined as a percentage of the equity that you have in your home. HELOC interest rates are low right now, and the application process for various banks is relatively straight forward.

Easing Expenses

Now that you have endeavored to create as much access to cash or credit as possible, it is time to see how low you can drive down your expenses. What is most important is also what is most difficult for people to do who pride their independence: You need to call your provider before you are going to be late on your bill. Providers know that many people are being hit hard by the pandemic, but you still need to pick up the phone and let the provider know that you need help.

Ready? You can do this.

Rent: Many people are super stressed about not being able to pay their mortgage. It has gotten a lot of press coverage, so know that you are not alone. Talk to your landlord about your situation. They might be more understanding that you anticipate.
Check the news to learn what is going on in your city. In Boston the mayor and major landlords have agreed to a 90-day eviction moratorium. Many housing courts are closed so they couldn’t even perform them if they wanted too. As for your landlord and their need to pay their mortgage? See the section below for information that might help them (heck, forward them this entire post, they might benefit from it too!).
Health Care: Some health insurance companies are doing things like relaxing co-pays for telemedicine during the crisis. Check out your insurer’s website to learn more about the changes that they are making. And if you get your insurance from the Health Connector and you have had a drop in income, remember to log on and revise your income so that your premiums reflect it.
If you’ve lost your job your best bet might be to apply for Medicaid, whose eligibility has been relaxed during the pandemic.
Electricity: In Massachusetts, Eversource is suspending disconnection of service for non-payment, eliminating all late-payment charges, and offering simple payment plans.
Heat: National Grid is offering to work with its customers who are having trouble paying their bills, including offering budget billing, providing customers with more time to pay, and linking with payment assistance programs. They have also temporarily suspended collections-related activities, including service disconnections, to lessen any financial hardship caused by the COVID-19 pandemic.
Cell Phone: Verizon is waiving overage charges and late fees to support customers who may be financially affected by the COVID-19 crisis.
Cable: Comcast Xfinity is offering WiFi Free to everyone, pausing its data plan, performing no disconnections, charging no late fees, and offering Internet Essentials free to new customers.

Dialing Down Debt

Finally, let’s tackle your debt, namely your mortgage, auto loan, student loan, and credit cards. Like with your expense providers, you need to call your provider before you are going to be late on your bill:

Mortgage: If you have a mortgage that is backed by Fannie Mae, Freddie Mac, or a Federal Home Loan Bank (you can check on that here), you may be able to put your payments into forbearance for up to 12 months, depending on your situation.
Auto loan: Contact your lender BEFORE your payment is due to see what their COVID-19 response is.
Federal Student Loans: Federal student loans have been put on pause through September 30. See this great article from U.S. News and World Report to learn more.
Credit Cards: Some credit card companies are waiving late or “returned check” fees, waiving interest charges, reducing monthly payments, reducing interest rates, and/or increasing credit limits.