If there’s one thing the coronavirus pandemic has shown us, it’s that our civilization is more fragile than we thought. Even a few weeks of shutdown and quarantine can wreak havoc on not just the economy – but our finances.
The pandemic has brought financial hardship to many of us. Not everyone is lucky enough to work from home during COVID-19, and some of us have been spending weeks or even months unable to work at all. The $1200 payment the government gave to Americans is long gone, and many of us are using that cash to pay rent or bills.
So how do you protect your money during COVID-19? What can we do to keep afloat during this troublesome time? It’s not easy, but it is doable. Here are some much-needed lifelines for us all.
Don’t Panic
First and foremost, do not panic. It can be a tall order, especially if you’re watching the volatile stock market fluctuate, threatening your retirement savings. Fight the urge to pull your cash out of your investments, as doing so now could see you losing money in the long run.
Instead, as scary as it might be, choose to ride out the stormy seas.
Yes, it’s frightening right now. But the economy will rebound, and so will your investments. It just takes time and patience – two things no one feels like they have right now, of course. So, take a deep breath and remind yourself: this is temporary. Things will get better.
Tighten Your Belt, A Lot
That being said, now is not the time to be spending money. You need to stretch your resources as far as possible because we don’t know when the economy will get back to firing on all cylinders. It means that it’s time to tighten your belt, and by a lot more than you’re likely to enjoy.
Those extraneous costs like ordering from DoorDash and GrubHub might keep you safe, but that’s a huge expense. You can save a bundle by having groceries delivered by Instacart and then cooking meals yourself. It’s not as convenient, but it’s much less expensive. Plus, you’re stuck at home – might as well learn how to cook!
Find Ways to Work Together
The one thing we need right now is better community bonds. Relying on ways to work together can take some of the financial burdens off. While we may not be able to be together physically due to social distancing, communities can pool their resources to organize ways so that everyone gets what they need.
An example of this is food and clothing drives to help distribute items from people who have more than enough to people who don’t. Clothes and food are necessities, but if your resources are limited, prioritize those funds to keep your roof over your head. Building ties with your community to ensure everyone has enough can help you save money.
Talk to An Expert
If you have access to a financial advisor, this is a good time to reach out with any concerns regarding your situation.
When shopping for a financial professional, set up calls with several prospective advisors. Look for someone with the appropriate experience to advise and put your interests first. In official terms, they should be a fiduciary, meaning they have a legal responsibility to do what’s best for you. Hire someone who will work well with your specific situation.
You can also look for an advisor who is a certified financial planner (CFP), meaning they’re trained in 72 areas of financial expertise and must have thousands of hours of experience before earning their certification.
Financial Protection Guide
Staying on Top of Credit Reports
Contact your lenders and servicers to let them know about your situation. Be prepared to discuss your income and explain how much you can afford to pay and when you’re likely to make regular payments.
Credit card companies and lenders might waive ATM fees, overdraft charges, and late fees, which include delaying, adjusting, or skipping some payments – if you ask.
Save Your Retirement Fund
The Coronavirus Aid, Relief, and Economic Security (CARES) Act will wave a 10 percent early withdrawal fee or 20 percent tax withholding for distributions if you need your money now but consider other means before tapping into your IRA or 401(k).
Sacrificing your retirement fund now makes it harder to meet your goals when it comes time to stop working. Lower your spending, or try your emergency fund first, then credit cards or mortgage.
Call Your Mortgage Company
If you are renting from an owner who has a federally backed mortgage, the CARES Act provides a suspension or postponement on evictions.
If you can’t pay your mortgage, contact your mortgage servicer to help you with forbearance options or to avoid foreclosure.
Defer Your Tax Payment
File later if you owe. The three-month extension provides three months of no-interest loans to those who owe the government money. There’s no better time to take advantage of the offer than now if you need it.
File now if you are getting a refund.
Paying Student Loans
If you have student loans, you have options.
Contact your student loan servicer if you have a federal student loan held by a commercial lender, a private student loan held by a bank, credit union, school, or other private entity.
Student loans held by the federal government were postponed, with no interest until September 30, 2020.
If You Lose Your Income
Look into your state’s unemployment policies for your options and benefits. Your state’s public health officials may also have information.
The CARES Act will allow states to extend benefits to self-employed and gig workers by providing an extra $600 per week and an additional 13 weeks of benefits.
Navigating Uncertainty
We can’t avoid uncertainty, only how we respond to it. I believe a crisis is an intersection between threats and opportunities. Although the bad news may be overwhelming, this can be an opportunity to learn and adapt.
COVID-19 won’t last forever. People will get back to work eventually, and the economy will be up and running soon. Now is the time to set new strategies to move forward. Stay smart, make good choices, and find ways to work together until then.
