Your Financial Health During the Pandemic

If there is one thing I am REALLY worried about right now with COVID 19 it’s people’s financial health.

Wait, you don’t care about our physical health?

Of course I do, but if you’re doing what you’ve been told to – washing your hands, eating properly, getting lots of rest, exercising a bit, staying away from huge gatherings of people, etc, you run a reduced risk of getting sick. You know what to do, and most of you are doing it. But there is so much more going on. I’m worried about people’s physical health and their mental health as well. This crisis is tough!

I am also concerned with people’s financial welfare. That can have an impact on their physical and emotional health as well. Restaurants, gyms, and other gathering places are closed. Major events have been cancelled, and this is going to drive the economy down a bit, even with the stimulus checks that will be coming in a few weeks.

More importantly, these kinds of crises also mean that people are being kept home from work. For many this means they have to take sick and vacation time in order to avoid losing pay, or they have to not get paid… and still there are those who don’t even have that choice.

My heart goes out to them, to you.

Many of you may be wondering, “How do we weather this financial storm?”

There are lots of things that you can do to mitigate the situation.

  1. Stay home if it is at all possible.For some, who are essential employees and for those who must venture out for health care and other needs this will not be the case. By staying home, not only will you spend less, but you will decrease your risk of exposure – which means you may not have to spend money on treating any illness.
  2. If you must go out, schedule all your stops in one trip – spend less money on gas.
  3. Before you go shopping, make a list, then scratch off everything that is a luxury – buy what you need, not what you want.
  4. Don’t always buy in bulk – not even toilet paper or paper towels. Granted, you might need some, but buying more than is needed simply costs you more for something you don’t need… maybe a back up pack – but not much more than that.
  5. Keep electricity use to a minimum – read a book, take a walk… (exercising will boost your health too).
  6. If you have multiple loads of wash – dry them one after the other utilizing heat that’s already been generated to keep the drying time lower.

What if I’m out of work and not getting paid?

  1. See if your employer is offering remote work options.
  2. Ask if this furlough time is covered by your Paid Time Off from work – better to be using that then not getting paid.
  3. Ask if you might benefit from unemployment compensation.
  4. Tap into your emergency fund.
  5. Sell stuff on e-bay (or any other sales app).

Specific Actions to Take, Especially If Your Money Situation Is Tight:

  1. Go back through your budget, and if you don’t have one – write one.
  2. Make sure that your four walls are covered first. The four walls are (in this order): Food (you can’t work if you don’t have strength), Utilities (you need to cook your food), Transportation and Shelter (remember you can live in your car, but you can’t drive your house to work)…insurances are part of this.
  3. Once you’ve covered your four walls, then only pay the minimum payments on all debts (unless your income is still secure). Anything you have left – throw into your emergency fund (or start one) We are in storm mode right now – you need to stockpile some cash in case the work situation gets worse.
  4. If you’re just making the 4 walls, and even more so if even that is a challenge, you need to do this next thing, which is very hard to do,…

Making the Tough Call:

You need to call your creditors. They are aware that things are getting bad out there.  It’s painful and embarrassing to call someone to whom you owe money to say things are tight, but you may have to do so. Some places are very good about working things out with you. Others are not. But an honest conversation gives you the peace of mind that you are being responsible for your obligations. Here are some ways you can work things out if you have money left after the four walls but not enough for all to whom you owe money:

  1. Pay the ‘priority’ bills like doctors, etc. Call the others and explain the situation. That priority may change each month… I’m hoping this ends in weeks not months…
  2. Offer to pay a pro-rata amount on your unsecured debt (consumer debt like credit cards, doctors bills etc). Certain debts will not accept partial payments (car loans), mortgages (except for when you pay every two weeks to accelerate your loan), and student loans.
  3. Ask for a interest rate reduction, a forbearance, or a deferral.

 

Do Not Accept Abusive or Illegal Treatment From a Debt Collector:

While debt collectors have a right to pursue the money they are owed, they do not have a right to break the law, to harass or threaten you – and they do and will.  Check out this link to see what your rights are under the Fair Debt Collections Practices Act.

If you have questions or concerns, I stand ready to help you.

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