COVID Economy Explained
This podcast aims to dispel the seemingly complex topic of personal finances, money management, retirement, savings and even investing.
First off, I would like to thank everyone that is currently tuning in and everyone that has continued to support the show over the last few months.
With all of the uncertainty in the world, one thing that we can control for the most part is our finances.
Thank you for your patience as the show did take a break the last couple of months but I am ready to continue to release new episodes and share my passion with others when it comes to creating true change with your money.
Some exciting things have happened for our show over the last couple of months and I can wait to share that with you later on in the show today.
Now, todays episode is going to be all about COVID-19 and your money.
To start, I have scoured the internet for the most commonly asked money questions in order to help my listeners better understand how the current pandemic can potentially effect your personal finances, emergency fund, investing and savings.
This episode will help you think about your budgeting better and how you may have to chance the way your doing things in order to keep up with our ever changing economic environment.
#1: “My paycheck may be at risk. Where can I turn”?
Now, the most serious and currently present economic effect of the virus is the lost of income. Just since mid-March, over 20.6 million people in America have lost their main source of income which is resulting in 14.7% of job loss. This is a level that hasn’t been seen in our country since the great depression.
Just to put that in perspective a little further, that number of job lose is more than double the number seen in 2007-2009great recession where the numbers topped at 8.7 million jobs lost.
Now, the most serious impact of job lose may be for those that were living paycheck to paycheck and who’s work depends on getting out of the house. For example, the food industry, travel industry, transportation, entertainment and more.
The good news is, if you have been effected by a loss of hours, illness, being laid off or furlowed, there are some resources that have been put in place to try and ease some of the hardship you may be experiencing.
First, try the federal government.
- Congress has passed several bills in recent weeks. The Families First Coronavirus Response Act (FFCRA) includes free coronavirus testing, up to two weeks of paid sick leave, and up to three months of paid family and medical leave. The Coronavirus Aid, Relief, and Economic Security (CARES) Act expands unemployment insurance by 13 weeks, and covers freelancers, gig workers, and individuals who are temporarily furloughed. It also mandates direct payments to taxpayers of up to $1,200 per adult and $500 per child. Read our full guide to the stimulus checks here.
- Then, research your state’s policies. Most state labor department websites have detailed COVID-19 pages where you can learn about their specific unemployment rules and regulations. Thanks to unemployment insurance, you may be able to get relief if you’re quarantined, furloughed, laid off, or providing family care due to coronavirus. You may also be eligible for assistance if your hours have been temporarily reduced.
- And look to your employer, too. Major corporations like Walmart, Uber, Lyft, Amazon, Darden Restaurants, Instacart, DoorDash, and Postmates have introduced initiatives for workers who are quarantined or diagnosed with COVID-19. Starbucks has announced “catastrophe pay” for workers who’ve been exposed to the virus, even if they’re not sick.
- Don’t forget about short-term disability insurance. You may already have this protection through your employer, though it often takes a week or two to kick in (and requires that you be physically unable to work).
- Secure business assistance. If you own a small business, you can apply for a low-interest loan from the Small Business Administration, or a federal emergency loan if you continue to pay your workers. You may also be able to get tax credits for providing sick leave. For more, check out this excellent resource hub for small business owners.
Stuck at home? You can also seek out remote side hustles to keep the money flowing. Some ideas include taking surveys, video transcription, or using skills such as writing and graphic design to find freelance gigs.
#2: “How can I control by budget with all of this uncertainty”?
Even in this time of uncertainty, it’s still possible to control what you can—and that includes how you spend your budget.
Your spending habits might change
You might spend more, because you’re stocking up on medications, or spend less, because you’re not out and about. Your food costs might increase because your children are eating at home, rather than school. (The FFCRA expanded SNAP to account for this additional expense; if you need further assistance, contact your child’s school and your local food bank.)
Longer-term decisions are important
While it might be tempting to spend quickly on things like toilet paper or canned goods, remember it’s important to save money for longer-term decisions as well, in case the coronavirus lingers for eight weeks or more. And, if you can, see what non-essentials you can cut from your budget today.
Non-essentials you can look at
– Cancel your gym membership if you’re self-quarantining
– Avoid rideshares and walk to the grocery store instead
– Download movies and books from your local library instead of paying for monthly streaming like Netflix or Hulu
#3 “How the heck am I going to pay my bills?”
Here’s a collection of good news when it comes to the bills piling up:
- Late fees policy: If you’re worried about a late fee, it’s worth calling directly to check on any specific coronavirus policies that might be in place. For example, several credit card issuers have announced relief for customers, such as waiving late fees, allowing skipped payments, or increasing credit lines. Some automotive financing companies, including Ford and General Motors, have also said they will also allow borrowers to miss payments (though interest will still accrue).
- Utilities: Many utility companies have vowed to work with customers to keep electricity and water flowing — and some cities have issued temporary moratoriums on utility shutoffs. Even Comcast, Charter, and other telecommunications companies have promised to continue providing internet service to users who can’t pay their bills.
- Mortgages & rent: The federal government has halted foreclosures and evictions for those with mortgages backed by the Federal Housing Administration, Freddie Mac, or Fannie Mae until the end of April. If you rent from a landlord with a federally-backed mortgage (or if you live somewhere that has temporarily halted evictions), your landlord can’t evict you or charge late fees for 120 days. Also, most banks are offering mortgage deferrals for up to 90 days without penalities. You just need to call your local banker and request a deferral on your mortgage. This will allow you to skip 3 months of payments that will then be added on to the back end of your mortgage loan.
- Student loans: If you have federal student loans, you don’t need to make payments until September 30, 2020. Since this suspension applies across the board, you don’t need to sign up for it (though it’s a good idea to log into your servicer’s site to make sure it’s following the rules). You won’t accrue interest during this period, either. With private student loans, you’ll have fewer options, but you can still see if your servicer offers “loan modification” programs.
- Refinancing: Now might also be a good time to refinance your mortgage, student loans, or personal loans, as the Federal Reserve recently slashed interest rates to zero in an effort to boost the economy. Refinancing a $200,000 mortgage from 4% to 3.5%, for example, could save you $14,000 over 30 years.
No matter what, if you’re struggling to pay your bills, we recommend contacting your bank or loan servicer immediately. Its customer service representatives can help you choose the best path forward.
#4 “ Does this qualify as an emergency so I can use my emergency fund?”
Although coronavirus has been declared a national emergency, it might not yet be an emergency in your household. If it’s not, we don’t suggest dipping into your emergency fund yet. You can stay prepared for the weeks ahead, by holding onto money you might need down the road.
In addition, if you’re still working — either from home, in health care, or in food or retail services — consider taking things a step further, and padding your emergency fund while you can. For example, try transferring $10 per day toward a separate, high-yield savings account. After a month, you’ll have $300, which could be just the boost you need later on.
#5 “My main financial goal has been investing but is now a good time with the stock market being so unstable?”
Regardless of the current stock market conditions, if your goal is to invest, you need to stick to investing. Make sure you consult with a financial advisor on the timing and stock picks to make sure your making the best decision.
Dollar cost averaging your investment will be important to make sure your getting the lowest cost basis you can on your stocks in your portfolio. As the great Warren Buffett says, the best time to invest is when everyone else is scared or selling. You have to keep in mind the very basic rule of thumb, its best to buy low and sell high. Don’t allow your emotions to dictate your actions and sell as soon as things start dipping in the stock market.
So now that we have gone over some great strategies and money tips for our current economic uncertainties, I would love to circle back to what I said at the beginning of the episode. Over the last couple of months the show wasn’t just taking a long series of “mental health days”.
I was hard at work creating and perfecting something I am truly excited to share with all of you!
As you know, helping you with your money is my personal passion and I wanted to find a way to do this on a bigger, streamlined scale.
I am excited to announce that I created the financially free journeys budgeting basics course. The course is designed similarly to my podcast, a no-nonsense, simple and actionable course that is designed to help any financial situation as it is and put my process in place to create true and lasting change.
The course is designed in 10 short, actionable video lessons with tools and resources accompanying each lesson so you can not just learn what you need to do but how to do it!
Look, if your tired of the month to month rat race and are ready to take action on making real change, this course is for you!
I have created a free webinar where I dive deeper into my process, structure and money secrets. The webinar is at www.achieveyourmoneygoals.com and I will also link the website in the show notes.
Thank you once again for tuning into todays episode and I hope that the tips I shared will help you during this time of uncertainty.
If your not already, make sure your following us on Instagram @financiallyfreejourney and twitter @financiallyj for daily tips and tricks to help you on your financially free journey.
Until next time!