Have questions about your finances related to the coronavirus outbreak? Email them to reporter Alicia Adamczyk at email@example.com.
With the coronavirus pandemic causing many workers to lose hours, it’s more important than ever to know what financial options you have.
While it’s well and good for financial advisors to tell you not to check your investments in a volatile market, that may not even be a worry for many Americans, when almost 80% of workers live paycheck to paycheck and many households say it would be difficult to cover an unexpected $400 expense. Losing shifts or being laid off during this time could exacerbate many Americans’ already precarious financial situations.
If you don’t have an emergency fund and are struggling to make ends meet during these uncertain times, here are eight steps to take.
1. Contact creditors right away
If you’re concerned it will be a struggle to pay your credit card balance, student loan debt or utilities in the coming months, the National Consumer Law Center advises contacting your creditors as soon as possible and asking for hardship concessions. This could include putting payments into forbearance (which should be a last resort as interest still accumulates) or making interest-only payments.
Banks including Capital One, Chase, Citi and Wells Fargo are encouraging their customers facing economic hardship to contact them to see what they can work out. Credit unions are also offering assistance and loan help. Additionally, you may be able to sign up for a hardship plan, which could mean lower interest rates or smaller fees and penalties for a time.
2. Create an “emergency” budget
The NCLC also advises creating a “leaner” version of your typical budget, which is smart regardless of if you are currently facing hardship or not. But it becomes doubly important if your hours are cut or shifts are canceled in the coming weeks.
To do this, “make a list of all your current obligations,” advises the NCLC. “Circle the things that are wants so you can see how much you could realistically save if you pause subscriptions, limit travel and make affordable meals at home.”
3. Consider a personal loan
Personal loans range from $10,000 to over $20,000 on average, according to Lending Tree, with a typical term of three to five years. They can help out in times of income insecurity. Banks, credit unions and online lenders like SoFi and Payoff offer them.
4. Use the product with the lowest interest rate
If you don’t qualify for a personal or home equity loan, you may need to use a credit card. Use your card with the lowest interest rate so that you’ll pay less in interest when you do pay off your bill. Even a few percentage points difference can save you a lot of money in interest repayments.
One option: Look for low-interest offers, whether that’s a credit card or a line of credit with a 0% APY for a certain time…