Ladies and gentlemen: it’s official. We have reached the most unpredictable moment of our lives.
Because of the COVID crisis, our economy —be it city, state, country, and the entire world—is facing unprecedented insecurity. I don’t need to go into details; you read and watch the news. Suffice it to say that with unemployment rates in April being reported at 14.7 percent, and with more people filing every day, there’s a good chance your wallet has been impacted by this crisis.
Even if you still have your job, I’m willing to bet you have changed your spending and saving habits in some way, intentionally or not. For example, if you are working from home, you are saving on fuel and maintenance on your car. Many automobile insurance companies are sending refunds or automatically discounting their rates. Perhaps you are no longer spending money on child care. Maybe you aren’t spending as much on clothes, toiletries, haircuts, etc. Dining out and going to the movies is no longer an option, so you’re saving there also.
However, many of you may not have your jobs any more. My heart goes out to you! If that is the case, you have much bigger things to worry about than “well at least I don’t have to spend money on a haircut.” It is not lost on me that there are much bigger problems. Mortgage, rent, credit card bills, medical bills: none of these things are negotiable. Or are they?
Here’s the thing: many banks and lenders are offering a great deal of leniency to their customers. The absolute worst thing you can do is nothing. Just because you cannot pay your bill on time, it doesn’t mean you can simply ignore it. The best thing you can do is communicate with your bank or credit card company. Grab your last bill, find the customer service number, and call it. The person who answers the phone wants to help you.
I recommend calling with a smile on your face and humility in your heart. Explain your situation in as simple and straightforward a manner as you can and ask, “Is there anything you can do to help me?” and then wait. Perhaps there is payment assistance, or waived late fees. Maybe you could set up a payment plan. Arm yourself with the facts and do what you can.
But be prepared: there is always a chance there is nothing the customer service agent can do to help you. In that case, say thank you and ask politely to speak with their supervisor. Again, explain your situation and ask “Is there anything you can do to help me?” If the answer is still no, you have some tough decisions to make and you need a plan;it’s time to weigh your options.
First, you need to list the absolute most important financial needs: food and shelter. In the state of Maine, Governor Janet Mills signed an executive order to prevent evictions for most tenants (visit Maine.gov for more information). I encourage you to learn what assistance you may be eligible for.
Second, it is important to list your other bills to know where you might be able to cut costs. Could you reduce your cable bill? Phone bill? Insurance costs? Where can you cut out costs completely—for example, do you have any recurring subscriptions you no longer use? Think about what is most important to you and your family;it’s easier to make decisions if you know your values and what is most important.
Now is not the time to be worried about your credit score, reducing debt, and saving for an emergency fund. This is the emergency you’ve been saving for!
Cash flow is the focus right now. Pay the minimum balance on your credit card if you can, don’t put money aside into savings if you need to pay your rent and electric bills, prioritize your spending. If you have savings and you need it, now is the time to use it!
Additionally, The CARES Act provides for people who have been affected by Covid-19 to borrow from their qualified retirement savings accounts (IRA, 401k, etc.) without penalty and you have up to three years to pay it back. There is some fine print, so before you decide to make that particular move, you should speak with a tax, accounting, or finance professional. The point is: if you have that resource and you need it, now is the time to help yourself.
To learn more about the CARES Act, google “CARES Act 2020.”
Things will get back to a “new normal” one day. None of us knows when that will be and what that will look like. What we do know is this: our economy has weathered many storms and this storm, too, shall pass.
My heart goes out to all of those affected by the coronavirus and I especially want to acknowledge the essential workers who put themselves directly in the line of fire every day to make our lives better: medical professionals, public and safety professionals, and every person who contributes to the supply chain. Thank you from the bottom of my heart.