What to Do if Your Essentials-Only Budget is Still Leaving You Short
May 18, 2020 | Education
If the pandemic has hit your business hard, chances are you’ve already tried scaling back your personal expenses. If you’ve paused every subscription, cut every non-essential, and are still finding it difficult to make ends meet, you aren’t alone. The unemployment rate in the US may hit 25% in the coming weeks as more businesses are shutting their doors. Credit card companies, landlords, and banks are expecting to have to work with people who temporarily can’t pay their bills.
We explore some ways of prioritizing your money so that you can keep yourself safe and limit the damage while you’re facing hardship. Service providers and debtors tend to take actions like cutting off your electricity or sending a nasty legal letter not the first time you don’t pay, but when they don’t hear from you. Communicate earnestly with your debtors and service providers to make a plan for the future.
Know what’s important, and what can wait. You need basic food in your pantry, you need a home, light and electricity, and you need healthcare. It’s easy to feel pressured into prioritizing other bills when you have angry debtors calling or emailing you, but they are just people following a script at their job. They don’t have to live your life. It’s important that you have a plan for your next-level priorities, but make sure you have what you need first.
Know your rights as a homeowner or tenant. If you have a federally-backed mortgage loan, you can let your servicer know that you’re experiencing a COVID-19-related hardship and request a forbearance for up to 180 days, which you may then be able to get extended for an additional 180 days. Investopedia explains how to find out if your mortgage is federally-backed and the process for getting mortgage relief.
If you’re renting a property, it’s likely that you will be protected from eviction during the lockdown, anywhere from 30 days to 120 days. You may also be protected from having your utilities cut off. This doesn’t mean that you don’t have to pay rent during the pandemic, it just means that you won’t be facing the stress of an eviction. Find out more about the programs in your state or city.
Talk to your local tax agency about payment plans. The IRS has pushed back the tax filing deadline to July 15. Many states are following suit. You may also be able to set up a payment plan for any taxes owed.
Stop paying your student loans (for now). Part of the CARES Act includes automatic suspension of principal and interest payments on federally held student loans through Sept. 30, 2020. If you have autopay on, you can likely switch it off until October. Of course, student loans come in many different forms. Find out whether you qualify for this relief.
Fine-tooth comb every fixed cost. Look at your phone bill, your renters and car insurance. If you have wifi, can you switch to a pay-as-you-go phone contract? Could you get a better deal from your current insurance companies? Could you rent your car out on Turo, and take the bus? Instead of stopping payments, try to negotiate your rates where you can.
Negotiate with your credit card company. Similarly, communicate with your credit card company. They will prefer to make a plan with you than to have you stop making payments altogether. Banks are working with a lot of people who are in a similar situation. Find out what type of help your bank is offering its customers.
When you’re low on money and you have mounting bills, it can feel overwhelming to face your debts head-on, call your providers and make a plan you can stick to. But although it might feel like it, this crisis won’t last forever. The same ingenuity, perseverance, and people skills that helped you build your business will help you navigate this financial hardship.
If your financial situation is causing you distress and you don’t know where to turn, the National Suicide Prevention Lifeline, 1-800-273-TALK (8255) or Live Online Chat.
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