The COVID-19 pandemic is causing financial disruption for everyone on a global scale. We’re sharing strategies to help you get through this challenging time and make smart money moves to help you reduce your financial strain.
Review Your Current Finances
Start by downloading your monthly bank and credit card statements for the past few months. Then, categorize and track the money you are spending each month in a spreadsheet or other financial software, such as Mint or Quicken. Next, look at your potential sources of income that will come from stable jobs, contracts, product sales, or other sources. Create a baseline personal budget using your historical information on expenses and potential income sources to identify any financial gap.
Look at Options for Your Expenses
Notice where you are spending your money now. Ask yourself if there are any areas where you might be able to lower your expenses right now. Also, look for any expenses where you might be able to negotiate an abatement or deferment, such as rent, utility bills, and debt payments. Know the difference between these two options. Abatement is a forgiveness of all or partial payment for a specified period of time, while deferment requires you to pay the deferred amount at a later date.
Talk to Your Landlord
If you are experiencing difficulty paying rent, seek relief under your city’s ordinance. Check your local government to see if they have issued an ordinance prohibiting evictions based on nonpayment of rent by tenants suffering negative financial impacts of COVID-19. Depending on your relationship with your landlord, start by talking with them about your situation. Try asking for rent abatement, but be ready for rent deferment. To make the request official, send a letter to your landlord stating the ways COVID-19 has financially impacted you and provide documentation on your financial hardship. Be sure the timing of your letter and supporting documentation complies with your local government’s ordinance.
Defer Your Utility Payments
If you are experiencing difficulty paying these utility bills, contact your utility companies to request a payment deferment and waiver of late fees and overage charges. Some state and local governments have issued orders that protect against utility shut-offs during the shelter-in-place period. These orders typically apply to basic utilities, such as electric, gas, water, internet, landline telephone, and cell phone. Check your state or local government to see which orders have been issued.
Negotiate with Your Lenders
Review your outstanding balances and payments on credit cards, student loans, mortgages, business loans, and other debt. If you need more time to make a payment or need to revisit your payment terms due the financial impact of COVID-19, contact your lender. Being behind on your payments can have a lasting damage on your credit, but if you communicate with your lenders, you may be able to negotiate new payment terms that won’t impact your credit. When contacting your lender, be prepared to explain and document your financial and employment situation, how much you can afford to pay, when you will likely be able to restart regular payments, and any questions regarding your income, expenses, and assets.
Apply for Relief Funds
Right now, it can be tempting to apply for every relief fund option, but we encourage people to look at the opportunity costs. Review the form of relief, eligibility criteria and time and effort required to apply to understand if it will work for your needs and how likely you are to receive it. In general, grants are best, but are highly competitive – look for grant opportunities that don’t require much effort to apply. Loans are risky, but may be an option if your sources of income are likely to withstand the ongoing negative economic impact of this crisis. Unemployment assistance can supplement your income if you were laid off, had a reduction in hours, or have experienced a loss in self-employed business income.
For more information on state and local government ordinances and relief funds in the areas where we operate, please check out our COVID-19 resource pages.