Tips & advice on getting your finances back on track.
The global impact of the COVID-19 pandemic will reach far beyond the immediate medical concerns of the next few months. With businesses being forced to shut their doors for at least the next two weeks, the financial shock-waves will be felt for much longer.
The impact is being felt not only by business owners, but the staff who work at these businesses too. It is hard to estimate how many people will be medically impacted by this virus, however workplace disruptions will leave many hourly wage earners short of the income they need to pay bills and cover basic expenses.
Many Americans lack an emergency fund to cover a financial emergency of only $400. With several weeks without work or pay, hourly workers may exhaust all of their cash reserves in a very short amount of time.
Information for individuals
Here’s are some steps to take, if you find yourself facing financial difficulty in the coming months.
Contact Your Creditors
Do this as soon as you realize that you have problem, before you have missed a payment. This can include credit cards, car loans, and mortgages. Reach out personally via the phone first to try to make a connection before using a hardship letter template that you may find online. A more personal approach to this critical step can be helpful.
Banks and other creditors are initiating programs and responses to the impact of the coronavirus as it evolves. Several creditors have issued statements indicating that they are willing to work with customers that experience financial difficulties.
Citi: Eligible credit cardholders may make use of “always on” assistance programs, which include credit line increases and collection forbearance options. Furthermore, Citi issued a statement that for 30 days, small business customers are eligible to have their monthly service fees waived. Citi is also waiving the fees on early CD withdrawals.
Wells Fargo: Wells Fargo donated $6.25 million in aid to help the public relief effort. The bank also encouraged customers that are experiencing financial hardship to contact customer service for assistance. Customers experiencing hardship related to coronavirus and in need of assistance are encouraged to call 1-800-219-9739 to speak with a trained specialist about available options.
This is by no means a complete list.
Switch to an Emergency Budget
Take a hard look at your budget to determine where you can free up some funds or cut back. If you don’t have a budget or aren’t sure where to start with setting one up, you can learn more about that here.
If you need assistance with creating or evaluating your budget, our trained credit counselors can help with a budget or credit counseling session to get you through this period. You can contact a Navicore credit counselor here.
Utilize Your Emergency Fund
If you have an emergency fund, try to use it sparingly. Once you are back at work, be sure to save a small amount each pay cycle in a separate bank account to re-establish (or start) your emergency fund. Being prepared for the next financial emergency will provide you with peace of mind, whether it’s being quarantined, another government furlough, or needing an expensive car repair.
Extra tips to get through the COVID-19 period
The money you regularly invest, say, in a Roth IRA, should be set aside in a savings account until you are able to go back to work. Once you’re back on the payroll, invest what is left of that money, if anything, so you are not tempted to spend it.
If you regularly pay a little extra on your mortgage, put that on hold for the duration of the quarantine or social distancing too. Just pay your minimum amount. However, if you can, continue to pay your credit card off completely so as not to be hit with large interest charges.
More about Credit Counseling
If you’re having trouble managing monthly bills, take the first step by reaching out to a certified Credit Counselor who will work with you to gain an in-depth understanding of your unique financial situation and develop a personalized plan for moving forward. When appropriate, a credit counselor can also work with your creditors so you can pay off your debt in less than five years through a Debt Management Plan. You can learn more about credit counseling here
The US Chamber of Commerce reports that plans for federal assistance for small businesses is currently underway. The U.S. Chamber of Commerce has called on the Administration and Congress to take critical steps to support America’s employers during this period of social distancing.
The three steps recommend by the Chamber include:
Small Business Administration
The SBA, announced it would offer disaster assistance loans for up to $2 million for small businesses affected by the coronavirus. These low-interest loans are available to businesses that have sustained “substantial economic injury” due to the spread of the coronavirus.
These loans can be used to pay off outstanding debts, payroll and any other bills they are unable to pay. However, small businesses that have access to credit are not eligible.
The SBA’s Office of Disaster Assistance will coordinate with state governors that submit relief requests. Once a state or territory is approved, affected businesses will receive more information.
Lori Stratford is the Social Media Strategist at Navicore Solutions. She promotes the reach of Navicore’s financial education to the public through social media and blog content.