The coronavirus pandemic has brought the topic of managing money to the forefront, causing more people than ever to wonder if they will be able to make ends meet. While times are uncertain for many, there are ways you can take control, save money, and enhance your financial security.
Crisis Money Management: If You Lost Your Income
If you’ve experienced a job loss or industry downturn that suddenly cut off your income, here’s what you can do.
- Apply for unemployment benefits. File for unemployment with your state’s Department of Labor. Generally, you may be able to do it all online. It’s important to file as soon as possible. Some states have a waiting period after you file, and they’re fielding a high volume of unemployment applications right now.
- Determine essential expenses. Once you have applied for unemployment benefits, you will know what money you will have coming in. Write that down, along with your available savings, and you’ll know exactly what you have available to spend. Next, write out what your essential expenses are for food, utilities, shelter, healthcare, transportation, etc. Cable is not essential. New clothes are not essential. Birthday gifts are not essential. Now’s the time to save money. Those five categories are where you allocate spending first.
- Identify all your assets. A financial setback is the time to use your emergency savings. On top of that money, look and see what other financial assets you have. Do you have gift cards that can help you pay for food or gas? Do you have credit card points that you can put toward gift cards for essentials? Do you have items you are not using that you can sell for extra cash? All these things are assets that you could use for essentials. Also, for those affected by COVID-19, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has temporarily relaxed government restrictions on, early distributions from retirement plans like 401(k)s and traditional IRAs, which may be a good source of emergency cash for some people.
- Put debt to rest. Debt is a burden at any time, but worrying about debt during a personal money crisis can derail effective money management. List all your monthly debt payments that do not fall into your essential categories. Immediately contact each creditor or financial institution and explain your situation. Ask if they have any programs that can help you, such as by lowering fees, reducing interest, or deferring payments. If they offer free financial counseling, take it. Ask your creditor how deferrals or modifications could affect your loan and possibly your credit.
- Contact utilities, insurance, and mortgage companies. Just as you did with your creditors, reach out to your utility company, insurance agent, and mortgage company and explain your situation. They may all have special assistance programs that can help you better manage payments.
Crisis Money Management: If You Have a Steady Income
Even if your income is steady and you don’t face increased expenses, bad-news headlines can make you concerned about your personal financial stability or cause you to wonder how you can save money. Here’s what you can do to better manage your money and protect your finances.
- Understand where your money goes. Take a close look at all your bills and credit card statements over a 30-day period to get better insight into what you are spending your money on. BluPeak Credit Union offers easy-to-use Money Management tools through Online and Mobile Banking to give you more visibility into your accounts and spending.
- Plump up your cash cushion. An ideal emergency fund should have enough to cover at least six months of expenses. Based on how much is currently in your emergency fund, make a plan to increase it. Take a look at your spending and determine where you can cut back. Then, tuck that extra money into your emergency fund or start adding money to your fund automatically by setting up recurring transfers from checking to savings.
- Prioritize saving and pause spending. A great way to feel more in control of your finances is to pause your spending and concentrate on saving for a specific period of time. This doesn’t have to be long-term or difficult. Commit to a single day each week when you won’t spend any money. Or commit to forgoing one specific expense all month, like drive-thru meals or fancy coffee drinks. Add the money you’ve saved to your emergency savings.
- Bear down on credit card balances. Look over all your credit card balances and interest rates. Could you transfer any balances on high-interest cards to your lowest-interest card without incurring any fees? If you can, then do so and start paying off the balance. Commit to not adding any additional debt to your cards that you cannot pay off each month. Here at BluPeak Credit Union, our popular Platinum Mastercard® credit card makes it easy to save money on transferred balances by offering great rates and no balance-transfer fees1.
- Manage your mortgage. If you have a mortgage, it may represent a significant monthly expense. By refinancing to a lower interest rate, eligible homeowners could reduce their payments or shorten their term to pay off their mortgage faster and save on interest.
Guard Against Fraud & Identity Theft
During times of uncertainty, con artists are very clever at leveraging consumers’ fears to steal money, information, or identities. Fraudulent emails that request charitable donations; calls from people saying they are debt collectors or debt settlement companies; and mail notifying you about winning a prize or lottery are all common scams.
- Never share account, credit card, or other financial information except with a business or organization you trust.
- Don’t click on any links or download email attachments you are unsure about.
- Don’t put up with high-pressure sales tactics.
- Check your financial statements monthly and your credit reports at least once a year.
- Shred financial documents before throwing them away (but hold onto certain important documents like tax returns).
We Can Help
As a member-owned financial cooperative, BluPeak Credit Union is committed to the financial well-being of our members and communities. If you are experiencing a financial setback and expect to have trouble making your credit union loan payments, talk to us. We want to work with you to come up with a solution.
Mobile and data rates apply when using Mobile Banking.
1. All loans subject to credit approval. Rates, terms and conditions subject to change without notice. Other restrictions apply.