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Forget the living paycheck at the paycheck. Many families lost their jobs during the pandemic and lack cash while waiting for unemployment checks and government assistance.
These are very unusual times and the family budget recommendations are also unconventional.
Kathy Hauer, a financial planner based in Aiken, S.C., says that she tells people to do things she never recommended before: “Postpone as many payments as possible and worry later.” “
But, she says, don’t just ignore all the bills. Be sure to call all companies and request forbearance – either late payment or a new payment plan.
This is a particularly difficult time for low-income families who do not have much flexibility in their budgets, says Hauer. They may not be able to borrow money from other family members. If they have bad credit, they cannot get personal loans from banks. Many also do not have or are about to make the most of credit cards.
Normally, personal finance experts tell people to avoid credit cards – and their high interest rates – like the plague.
But these days, Greg McBride, chief financial analyst at Bankrate.com, said, “This is the only time it is OK to make minimum payments on your credit card. At least it will save consumers time on their bills and allow them to support themselves.
Here are some of their tips:
Make a list of all invoices that fall due in the next two months. Call each company and ask if they can delay your payment or offer you a more affordable payment plan.
Housing, student and medical loans
- See if you can get a break from your mortgage. US regulators have ordered loans guaranteed by mortgage giants Fannie Mae and Freddie Mac to provide flexibility in mortgage payments for up to a year. Some banks offer options to defer mortgage payments, for example. Either way, check the fine print, as some of these agreements have strict conditions.
Courtesy of Dyan Navejar
- For tenants: many cities have asked for an end to evictions, but without offering much additional advice. Large companies may have more flexibility to accept late payments. Dyan Navejar, who lives in Lexington, Kentucky, said his landlord had told him that he was not a conglomerate and that he needed his rent in time to be able to pay his mortgage payments. So he said to her, “It’s as usual. “
- Student loans and medical loans often offer adjustments based on ability to pay. Student loans often adjust payments based on income, for example. Hauer, the financial advisor, says the same goes for medical bills. “Most medical providers will allow you to set up a payment plan, and most of them charge no interest or very low interest,” she says, so don’t put those bills on your credit card. , where interest rates are much higher.
For other services and monthly invoices
- Many water, electric and gas services do not interrupt service, but be sure to confirm that you are eligible for this program and make sure that your service is not accidentally interrupted. Also check with your Internet and telephony providers.
- Review any recurring charges you may have on automatic payment. Cancel all unnecessary items, such as cable TV, music streaming and other subscriptions.
Courtesy of Seth Franklin
Candace Grenier, a dental hygienist who takes refuge in Anchorage, Alaska, lost her job last month. She and her son both applied for unemployment benefits but did not receive them. “It was a kind of struggle,” she says. The unemployment offices “have been so overloaded with requests because there have been so many layoffs,” said Grenier. The long list of services it has cut from its budget includes cable TV and snow removal from its snowy driveway.
- Some choices are particularly difficult. Take health insurance, for example, if you qualify. “You really are faced with a huge, huge choice, because if you don’t pay for your health insurance and someone gets sick, it can be a disaster,” says Hauer.
In Orlando, Florida, this is a concern for Andrea Delacruz and her husband, both of whom have been out of work for the past month. Her husband lost his job as a bus driver before becoming eligible for health insurance benefits. To repel them, her husband thinks of driving for Uber or Lyft. His wife is concerned that the family will be exposed to the coronavirus. “I prefer not to have money and I owe a lot of money [and] when it’s all over, talk to people and see what they can do, [rather] that I would risk my life, “says Delacruz.
- First buy the necessary items, such as food and medicine – items that cannot be delayed. Try to save money by using credit or loan money for these items, if you can. “Low-income households tend to manage a much leaner budget at the outset and do not have these foreign expenses that can be reduced,” said McBride of Bankrate.com.
- If you need to borrow money, ask your family or friends first. If it is not an option and you have good credit scores, you may also be eligible for a personal loan from a bank. These interest rates are about half that of most credit cards.
- Make the minimum payment on the credit card and use it to buy food and other necessities.
- For those with retirement accounts, tapping into them is a last resort as there are tax penalties for doing so.
- Find a free credit counselor. “They specialize not only in helping people budget, but they can also interact with your creditors,” says McBride.