Getting Through a Financial Emergency
Very rarely there are financial emergencies as serious as the one our nation is seeing now with the economic downturn influenced by the COVID-19 virus. Some people won’t feel the effects of the economic slowdown much while some folks will be greatly impacted.
No one knows for sure, but experts say the economy may be impacted for months while we wait for the COVID-19 virus to run its course. If you have a financial emergency due to lost wages there are a few ways to lessen its effects.
First, prioritize your budget to provide the essentials for your family. Shelter, food and transportation are the first bills that should be paid. Secondly, keep health, car and homeowners or renters insurance up to date. A sickness, fire or car accident without proper insurance would be devastating to an already strained budget. But you can call your insurance provider to see if there are ways you might save some money on premiums by raising your deductible or eliminating add-ons you may be able to live without.
Eliminate (if you need to) any non-essentials. Cable or satellite TV, streaming services, subscriptions to gyms or the local coffee shop can be eliminated. Since some retail shops are closed such as restaurants, bars, gyms and salons, shopping less might be easy. Many restaurants are still offering take–out or drive thru services, and eating at home is easier on your budget. (An added benefit is you know who prepared the food.)
Find out if there is a food bank in your area if you feel food-insecure. Don’t be embarrassed to use a service being provided for just this very reason — an emergency. Some utility companies have announced that they will not cut off services during this time. Check to see if your particular utility provider is one of these, and if necessary you might delay an electric or gas or water bill. (Those amounts will be due at a later time, however.)
If you can’t pay ANY bill remember that good communication is key! Call the creditor and explain your situation. They may be able to help by letting you skip a payment or two (adding those payments on to the balance) or by letting you make a partial payment. Be sure to get those agreements in writing so you can refer back to them in the future if needed.
Avoid putting extra charges on your credit card if possible. And if it is really necessary, be very careful about what you charge. Remind yourself of your credit limit and do not exceed it. Be aware also, of your interest rate.
If you still have some income, you might adjust or temporarily stop payroll deductions to savings or retirement but don’t be tempted to cash in your retirement account. You will be hit with penalties and taxes which could take away a big part of your account.
If you have an emergency account, this is the time to use it. This is a genuine emergency for many people. But remember, this is a temporary situation. Be strong and know that you are capable of cutting back on spending for a time.