6 Tips to Keep Your Finances Afloat During the COVID-19 Pandemic

Medscape offers 6 Tips to Keep Your Finances Afloat During the COVID-19 Pandemic…
 
1. Cut back on expenses

Some household spending has naturally tapered off for many families, as social distancing restrictions reduce spending on eating out, travel, and other leisure activities. But this is also an opportunity to look for other ways to reduce spending. Look through your credit card bills to see whether there are recurring payments you can cut, such as a payment to a gym that’s temporarily closed or a monthly subscription box that you don’t need…

2. Take advantage of regulatory changes

Although many physicians won’t qualify for direct payments via the Coronavirus Aid Relief and Economic Security (CARES) Act (the $2400 payments to individuals start phasing out once income hits $75,000 and disappear entirely for those making more than $99,000), there are other provisions in the stimulus bill that may help physicians. The bill, for example, boosts state unemployment payments by $600 per week for the next 4 months, meaning qualified workers could receive an average of nearly $1000 per week, depending on their state, and there are new provisions providing unemployment payments to self-employed and contract workers…

3. Tap your home equity — if you’re planning to stay put

If you have good credit and still have some income, you might consider refinancing your home mortgage or opening a home equity line of credit. Interest rates have fallen recently amid economic turbulence, so if you haven’t refinanced recently you may be able to shave your monthly payment. If you need cash, a cash-out refinance, home equity line of credit, or a reverse mortgage (available if you’re over age 62) are among the lowest-cost ways to borrow…

4. Communicate early with your bank or landlord

If you don’t have the income to refinance, and you think you’re going to run into trouble making your housing payment, you should let your bank or landlord know as soon as possible. The CARES Act allows homeowners with federally backed mortgages to obtain a 180-day postponement of mortgage payments because of COVID-19 financial hardship, with the potential to extend for another 180 days. It also bans eviction by landlords with federal mortgages for 120 days…

5. Consider retirement account withdrawals

Standard personal finance advice holds that you should exhaust all other options before pulling money out of your retirement account because of the high penalties for early withdrawals and because money removed from retirement accounts is no longer compounding over time.

Still, the CARES act has provisions making it less financially onerous to pull money from your retirement accounts. Under the new law, you can take a distribution of up to $100,000 from your IRA or 401(k) without having to pay the 10% early withdrawal penalty. You’ll owe ordinary income taxes on the withdrawal, but you have three years to pay them, or to return the money to your retirement account…

6. Be smart about credit cards

Although using credit cards that you can’t pay off every month is typically an expensive way to access money, getting a new card with a low or zero percent introductory rate is a short-term strategy to consider when you’ve exhausted other options. If you have good credit, you may be able to qualify for a credit card with a 0% introductory interest rate on new transactions. Pay close attention to the fine print, including the cap on the balance you can carry without interest and whether you’ll be required to make minimum payments…

 
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View all Articles by: Melissa Clark, CCS-P