Creating a financial emergency plan in response to COVID-19

Creating a financial emergency plan in response to COVID-19

Balancing and understanding how to be savvy about juggling your money is essential in today’s climate when many businesses may be offering extensions to the monthly payments. Knowing what questions to ask, how to ask and confirming is going to be important and help you reserve your money today for the things you need first.

Take a deep breath. Recognize that you are not alone, and that you have the power to transform your financial narrative and situation now. While you may initially be feeling overwhelmed, even paralyzed and before you allow the internal loop of worry and angst to take over. Take a deep breath again. And then, another. Give yourself the gift of saying, “I got this, I am fearless”. And know that it is ok to ask for help.

Savvy Ladies Financial Helpline
Create your COVID-19 Emergency budget
Time to prioritize your spending, download the budget sheet below to list all your expenses. Now determine what expenses are absolute necessities and what you can live without. Maybe it’s time to review your subscriptions services? What is the best strategy for using your Stimulus Check? Getting the total picture of your monthly expenses will help you understand just where you can cut back. You can download your own budgeting worksheet here.
Finding Your Balance Financially. Creditors are extending payment dates.
You have the ability to transform your future by taking small steps today that will transform your financial well-being. Addressing your financial emergency is going to take courage. It may even require a level of tenacious stick-tuitiveness that you may have thought was reserved for the most assertive among us.

The good news is that many of the creditors will be more than happy to extend your time to pay, or even strike deals with you so that payment is easier.

Here’s how to get started.

  1. Put a list together of all your credit cards that have a balance due
    Document the balance of each card and its Annual Percentage Rate (APR) (the % of interest you are charged for your credit card purchases which accumulates daily).
  2. Visit the website for your credit card company
    The company website is your first best option to get the most updated information about your account and any relief the company is offering its clients. If you have not already created an online account, this would be a good time to do so.
  3. Most credit card issuers are allowing delayed payments and waiving penalty fees.
    However, pay close attention, most banks are continuing to charge interest on your balance.
  4. Understand how much it will cost you to skip payments! Below is an easy Savvy Ladies Credit Card Interest Calculator to determine how much your credit card balance is costing you each month.

This is the time to conserve cash if you are, or will eventually struggle to pay your bills. Putting off credit card payments for 30-90 days is a reasonable strategy to maintain your cash saving now. Click on the image below to download the calculator.

Credit Card Finance Charge Calculator
If you are having trouble paying your utilities, contact your utilities company. Many companies will not disconnect services during the pandemic and are also waiving late fees, but you need to call or check their website to see if they are doing this. Eventually, you’ll need to pay your utilities bills so if you are able to pay what you can now, you’ll avoid a larger bill down the road. You may also be able to set up a payment plan if you contact them.
Student Loans
To provide relief to student loan borrowers during the COVID-19 national emergency, federal student loan borrowers are automatically being placed in an administrative forbearance, which allows you to temporarily stop making your monthly loan payment. This suspension of payments will last until Sept. 30, 2020, but you can still make payments if you choose. Interest is being temporarily set at 0% on federal student loans through September 30, 2020. For more information, visit the Federal Student Aid website for coronavirus information.
Check out our webinar Financial Aid In The Days Of The Coronavirus Emergency for more information.
Your Retirement Accounts (401k, IRA)

Should you stop contributing to your retirement accounts during a volatile stock market? You’ve heard the adage “buy low, sell high” taking your money out of the market now is a panic strategy. You want to be ready to buy investments when they are on sale. Stay the course of your investment strategy and don’t let emotions and fear guide your decision making. Conventional wisdom: your retirement accounts should be a last resort for borrowing.

However The CARES Act, does allows you to withdraw up to $100,000 from a retirement account (IRA, 401(k), etc.) as long as you can prove that you need the money because of the pandemic, without a 10% penalty even if you are not 59½ years old.

You will still owe taxes on the withdrawal amount, but you can spread the tax bill over three years from the distribution date.

For example if you withdraw $30,000 and you are in the 24% tax bracket (30,000 x .24), you will owe $7,200 in taxes or $2400 per year for three years for taking your retirement funds as income. If you choose to repay yourself you’ll have three years from the day after you took the distribution.

Budget Calculator

Insurance premiums
As a result of the stay-at-home orders, several of the largest U.S. auto insurance companies have informed customers that they will give back a portion of premiums to policyholders because they have fewer accidents to cover. This will not likely come to you in the form of cash, but credit your premium payment going forward. Check your auto insurance company website to see what reductions you’ll receive.
Talk to your landlord now if you’ve lost your income as a result of COVID-19
According to CNBC approximately 10 million Americans filed for unemployment over the past two weeks. For renters, the CARES ACT and many states and cities have banned evictions during the COVID-19. New York, for example, has a 90 day eviction ban. While the eviction ban is helpful, the idea of not being able to pay your rent may seem unbearable.

For those of you that anticipate or are already struggling to pay your monthly rent, here are a few suggestions:

1. Make sure you communicate with your landlord and that you are transparent and honest about your economic issues.

2. If you have been furloughed or otherwise find yourself unemployed, be sure that you have proof of your unemployment to provide your landlord. The landlord will likely request documentation, be prepared to provide this information. Your landlord may also ask for a financial statement.

Continue reading here.

Employment Rights and COVID-19
Your rights as an employee remain in effect, The Families First Coronavirus Response Act (FFCRA) which went into effect on April 1, 2020 and will continue through December 31, 2020.

The Equal Employment Opportunity Commission (EEOC) continues to enforce the nation’s employment non-discrimination laws while ensuring that all of our activities are consistent with public health guidelines.

Dominate Your Debt® Course offered by Savvy Ladies – Save your Spot!
The financial stress created by COVID-19 will affect most Americans, and disproportionately affect women. This June, Savvy Ladies will offer a free online course to help you tackle your debt and get back on track with your financial life. If you are interested, register here.

Is your debt a mindset or habit? What to do to pay off debt is not a secret: throw money at it until it’s gone. Dominate Your Debt® answers the trickier question …..How do I take control of my debt, pay it off on my own terms, and still live my life?”

Dominate Your Debt

This free on-line course will:
Give you confidence to confront your debt
Understand debt, repayment plans, and collections
Provide Tools and resources you can use to tackle your debt

How do I take control of my debt, pay it off on my own terms, and still live my life? Save your spot in our free Dominate Your Debt® online course

Most Importantly, forgive yourself for your present financial picture. Release your shame story knowing that you are human and perfectly imperfect. Today is the first day of the rest of your financial life. As you navigate forward, and engage on the path to financial stability you may experience a range of emotions. Hold on for the roller-coaster, and remain seated for the long-game.

Interestingly, the shame of not being financially savvy can interfere with your ability to change your circumstance. If you are feeling embarrassed or anxious by your lack of knowledge, that is okay. Notice how you feel and then allow the feeling to pass through you. Holding onto fear is not going to serve you.

Get your financial questions answered.

Visit the Savvy Ladies Free Financial Helpline. 

Get the Expert Advice You Deserve.