The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.
3 Steps for Taking Care of Your Finances Right Now
The economy and personal finances are top-of-mind as of late. Along with everything going on in this world, addressing your finances may feel overwhelmingly uncertain, confusing and worrisome. Take the first step and watch our video below for a brief overview of assessing your finances since January, relief options and tightening up your spending. Then keep reading below to get all the helpful details.
Over the last several weeks, we’ve been told to do and don’t do a lot amidst the COVID-19 and economic crisis: wash your hands, stay at home, distance yourself from others as much as possible — and take care of your finances. In this changing economy, it’s time to evaluate your financial situation. We’ve provided a 3-step guide below.
1. Get a Snapshot of Your Spending Over the Last 3 Months
Concerned about your financial future? You’re not alone. Over 60% of Americans are worried about their finances because of the effects of COVID-19, according to a survey by The Ascent, from The Motley Fool. First you’ll want to review your expenses since the new year:
- Calculate the total of non-negotiables like rent/mortgage payment, bills, food, prescriptions, etc. Designate funds toward these obligations first and foremost.
- Review the more flexible expenses like transportation, entertainment, shopping, personal care, etc. Now because of the mandated quarantine, it’s easier to cut back on entertainment, gas, eating out, etc. To really see where you’re overspending, highlight lines of unnecessary spending on a previous bank statement, and cut those purchases for next month’s budget.
Maybe you need to break up with Amazon for a bit, meal prep at home or limit your TV streaming service subscriptions to one. You’ll feel better knowing you’re doing what it takes to allocate your money to where it’s needed most, like your emergency savings or credit card balance.
2. Research Available Assistance
If your cash flow is shaky or currently non-existent and your family is struggling financially without monetary backup, reach out for help and take advantage of relief solutions:
- Contact your financial institution about options for loan modifications, loan extensions or forbearance. Ask about any emergency policies such as waiving late fees or credit protection. At Desert Financial, you can visit DesertFinancial.com/Health to learn about our current offerings and contact us information.
- If you’re a homeowner struggling to pay your mortgage, you may be protected by a foreclosure moratorium and right to forbearance. Moratoriums suspend or stop foreclosure, and forbearance is a pause or reduction in payments for a limited period of time. Learn more about these protections for federally backed mortgages by visiting the Consumer Financial Protection Bureau.
- As of March 30th, the Rental Eviction Prevention Assistance Program, administered by the Arizona Department of Housing, is providing $5 million in new state funding to provide relief for Arizona residents who can’t pay their rent. Visit the ADOH to learn more about eviction prevention assistance. Also talk to your landlord about your inability to make payments and any accommodations that can be made.
- Debt is also a major concern for those can’t even afford their basic living expenses. If paying for your federal student loan is a worry, the Coronavirus Aid, Relief and Economic Security Act is automatically suspending payments and accruing interest until Sept. 30, 2020. The U.S. Department of Education Office of Federal Student Aid provides up-to-date details for federal student loan borrowers.
For other types of debt, you can lean into debt consolidation options like taking out a personal loan or home equity line of credit. For credit card debt, reach out to your issuer to see if lower monthly payments and interest rates are available. Since this outbreak and economic downfall are unprecedented, your issuer is likely to work with you.
- You can also contact your utility company for assistance on your bills. Many companies are helping to alleviate customers’ financial strain by waiving fees for late or overdue payments, reducing bills and deferring payments. For the next 60 days, your Internet and cable provider may not be suspending services either as encouraged by the FCC.
- How is your employer taking care of you? If your company hasn’t already listed ways it can support the financial hardships of its employees, now is the time to inquire. Is there extended paid leave? Could your manager help answer if there’s a threat of layoffs? What is your company doing to protect or uplift employees?
- Because of the automatic tax extension, you don’t have to file or pay taxes until July 15th. Learn more tax filing in Arizona during the Coronavirus pandemic.
3. Spend With Caution
If budgeting is a weakness of yours, a good practice to follow right now is to spend less overall. Tomorrow is unpredictable, and you never know what kind of financial situation you’ll find yourself in within 24 hours. If you’re a master budgeter, try to plan a weekly budget, replacing your monthly budget, to make sure you really stay on track daily. See if you thin out your spending even more by:
- Purchasing off-brand items instead of name-brand.
- Trimming the grocery list: alcoholic beverages, produce that always goes bad, and desserts.
- Planning one run for your errands to save on gas (rather than heading out frequently).
- Grocery shopping without the kids to avoid extra snacks and goodies going into the cart.
- Quitting any non-essential shopping, avoiding online “window browsing” and unsubscribe to retail emails.
For our safety and wellbeing, we’re being told to do a lot — but it’s in the best interest of everyone, including ourselves and our loved ones. One step you can take, between washing your hands and staying at home, is to give your finances some love and attention.