It is a strange, surreal world out there, friends. Hard-working individuals and business owners everywhere are finding themselves suddenly out of jobs and having to close their incredibly loved businesses. Nurses and doctors are struggling to find enough personal protective equipment, while college seniors are learning they’ll graduate…remotely.
Like we said, it is an incredibly difficult, sad, and uncertain time for all of us. We won’t ignore that. However, if you’re one of the many who are afraid of how you’ll make ends meet in the light of all of this, rest assured that you have options. We’ve outlined below a few important possibilities for you to consider implementing during this unpredictable (and unprecedented time):
Make a list of all of your expenses and figure out which you can eliminate.
If you’re concerned about your future earning potential or income stream, then start by taking a close look at those expenses. Are there any less important or less “essential” expenses you might be able to reduce or cut right now? Look particularly closely at any memberships or subscription services you’re currently using. With life seemingly on pause for the moment, it might make sense to cut back on any of the lesser used subscription services in favor of keeping the lights (and TV!) on at your house.
Contact your lenders and leasing organizations.
Begin contacting your creditors (such as your landlord, mortgage broker, credit card company, phone service, etc.) to inquire about what types of forgiveness or payment deferrals they’ll allow. Many banks are offering payment extensions, depending on the type of mortgage loan you have, and certain other companies have expressed that they’re more than willing to assist clients with alternative payment options given these unique circumstances. Our advice: it pays to ask. Be sure to be proactive in reaching out to these creditors before missing a payment. They’re typically more likely to assist you if you’re reaching out in earnest before a problem occurs than after the fact.
Utilize your credit or debit cards, where appropriate.
If you’re genuinely concerned about having enough money to put food on the table and to keep you and your family healthy, then utilize your credit and/or debit cards for the time being. While we would typically encourage you NOT to rely on these forms of payment, we know that for some, this might be the only way to pay for groceries. That said, be wise when using these tools and don’t be tempted to go on a little shopping spree. Instead, be sure to contact your bank if you need to take advantage of a personal line of credit or use your overdraft protection. Again, it is MUCH better to reach out in advance of using these tools so you know your options and understand how this will impact your finances in the long term. Another tip: be sure you make the minimum monthly payment on all cards before using them.
Apply for Unemployment.
Every state processes unemployment applications differently, so it is smart to know what’s available to you. A quick Google search for your state’s unemployment form will allow you to get the process started. The recently passed CARES Act has even increased the amount of weekly income you’ll be eligible to receive during this time, so be sure to act fast to ensure you can take advantage of this process in order to protect yourself and your family.
Leverage the newly released retirement options, if applicable.
If you’ve been directly impacted by the coronavirus (either by contracting the disease yourself, caring for a dependent that has it, or have lost your job due to this ongoing health crisis), you now have the option to either take an early withdrawal from your retirement account OR take out a loan, if you so choose without the normal 10% standard penalty for doing so. Each option has pros and cons, so be sure you’re thinking through all of your options before relying on using your retirement savings. To read up on the specific guidelines involved with these options, check out this helpful link here.
You can access 529 plans, if you have them.
If you have a 529 college savings plan for yourself or your child, you can withdraw funds from this account at any time. However, note that you will be responsible for paying income tax on the withdrawal and will be also hit with a 10% penalty fee if the funds are not used for a qualifying educational expense. That said, student loan payments are now considered qualified educational expenses, so this could be a good option for you if you’re in need of assistance in this area or need additional access to cash.
You can halt payments on those federal student loans.
One part of the CARES Act that you might be most excited about pertains to student loan payments on federal loans. If you have a federal student loan, you are not required to make payments on it until September 30, 2020. However, if you do have a private student loan, you can contact the lender to see what types of options you might have if you’re under financial stress and unable to make the current payments.
Don’t forget about your car loans or insurance.
If you’re concerned about being able to afford your car payments, give your lender, leasing company, and/or insurance agent a call immediately. Due to the extreme circumstances, many of these companies have either put emergency plans in place or may allow you to defer payments for a month or more. It’s worth making the call.
Now, if you’re worried about how these changes might impact you in the future, our best suggestion is to stay organized right now financially. Make a note or have documentation of all of the changes to payment plans you might receive. Update your bill “due date” schedule and make sure you adjust your budget to account for any discounts or reduced expenses you might be able to find. Once this is all over, it will be wise to focus on paying down any debts (starting with the highest interest rate payments first) as well as focus on building/replenishing those emergency funds.Finally, remember not to take any of this too personally. This situation is not your fault, and we will all rise to the challenge together.
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