U.S. unemployment has skyrocketed in direct correlation with the spread of the COVID-19 virus. If you’re one of those people facing unemployment or reduced hours, you may struggle to meet your financial obligations or even put food on the table. Here are some suggestions for what you can do to manage your budget, even in the thick of this economic downturn.
CNBC says now is a good time to look at how you’re spending money. They recommend you make a list of everything you’re spending and circle any items that are discretionary spending. Figuring out what you need to keep your household running versus what you want or what is extra is a great way to understand where your money is going. Try to eliminate any extra expenses. Ask yourself, “What can I cut?” For example, can you live without cable TV or an unlimited phone plan, delivery services, subscriptions, or a cleaning service? When life is “normal,” these are great things to have—but you can probably live without them.
This exercise will help you find your “bottom line number” for expenses that are required to keep your family fed and a roof over their heads. This could include rent or mortgage, electricity or gas, food, and insurance.
If you have an emergency savings account, take that bottom line number and divide it into your savings to figure out how many months you have where you can pay your bottom line expenses with no additional income coming in. But what if you, like most Americans, don’t have any savings to draw upon?
Planning for Economic Downturn
If you don’t have much money stashed away, you are not alone. Almost 70% of Americans have less than $1,000 in their cash reserves. For these people, start with the most basic elements to keep your household running; food and shelter.
If you’re worried about making your mortgage, call your lender immediately and work out a payment plan. Many banks are now working with mortgage holders to help them during the pandemic. According to CNBC, federal regulators are ordering these lenders to be flexible in their collection efforts. This affects renters too because their landlords likely also have mortgages affected by this new leniency.
Next, talk with your utility companies. Find out if they would be willing to waive any late fees or could provide you with a new repayment plan with lower interest. If you have credit card debt, but you were only making the minimum payment, call the company to set up a payment arrangement, so they’re not tacking on fees and interest or sending you to collections. Consider a balance transfer to a lower-interest card or one that has a 0% introductory period.
More than anything else, remember to communicate with your lenders. It might be hard to believe, but a simple phone call to a bank or utility company to let them know your situation and to work out a payment plan is the best thing you can do. But also make sure you map out a plan for spending and your budget. Here are some additional resources that may help:
- Click here to find out what credit card companies and banks are doing to help their customers.
- Click here for additional financial resources.
- Click here for a list of food pantries by state.
If you’ve lost your job, contact IES. We help people get back to work.