Money Check: Tips for those with impacted incomes.
Finance Friday 5/8/2020 Edition
1. If my income has been affected or reduced, how can I save money at home?
First and foremost, have a look at your subscriptions. Things that you can eliminate temporarily include automatic commuter costs, gym and wellness center memberships and any other memberships you can’t actually use right now as a result of COVID closures. Don’t expect these companies to proactively put your recurring monthly charge on hold.
Second, do an audit of the virtual services you do pay for. There are many services subscriptions currently being offered for free or at a reduced price. Take advantage of those and make the hard call to not subscribe to every music and video streaming service...I promise you don’t need them all.
If you spent most of your time at work and now find yourself at home, review some of the things you used to pay for that you may now be able to take care of yourself. You likely don’t need to:
drop off laundry
incur dry cleaning expenses
get help with cleaning and upkeep
pay for your dog walker
pay for help caring for your plants or property
Given that these also require interaction with outside parties, it’s highly recommended that you minimize taking advantage of these services. #flattenTheCurve
2. What expenses should I be prepared to cut to save money during quarantine?
Takeout. While ordering your local favorite can be a nice treat during this time, there is a lot of money to be saved in getting into the habit of shopping for and preparing most of your meals. Plus, you do have a whole lot of additional time at home (unless you are an essential worker...bless your heart).
Groceries. Be more strategic. While for many, this can seem burdensome, there are some simple trick (googles) that can make it easy and minimize your number of trips to the wild wild west (read: grocery store). Plan your meals for the week. This will help you get a sense for how much your household really consumes and, over time will make it easier to buy just what you need. It will also eliminate the need for multiple trips to the store. You can also leverage online healthy eating plans where someone has already done work of writing out you shopping list for you (ex. https://www.popsugar.com/fitness/2-Week-Clean-Eating-Plan-39190722, https://www.buzzfeed.com/christinebyrne/clean-eating-2015)
Debt. You may be able to reduce the interest rates you are paying on your debt. If you own a home, inquire with your mortgage lender about the possibility of refinancing. If you need help with this reach out to a financial coach (hi) or financial advisor (happy to recommend my faves) for a consultation. You can do the same thing with your credit card providers by reaching out an inquiring about rate changes or reductions in minimum payments. NOTE: credit card providers are in no way obligated to make changes based on your inquiry, BUT its worth the ask.
3. What are the best ways I can increase income during this time?
As mentioned above, I highly recommend homeowners consider the possibility of refinancing their mortgages. Depending on you initially granted interest rates, there is the possibility of significant savings over time as well as significant reduction in you monthly payment.
If people can afford to make small investments in the public markets at this time, they will benefit from acquiring equities low and be able to benefit from a bouncing back economy in the time after COVID. While this does not increase income during this time, it is worth considering slicing off small chunks to move into an investment account. Happy to make recommendations on those that are easiest to get set up!
Generating another stream of income via side hustle is also worth considering. There is plenty of disposable time that is now inevitable in these efforts but this will require significant time and investment. More ideas here.
4. Should I take advantage of things like student loan or mortgage forbearance or will those options cause me financial problems later?
Forbearance is a useful tool but there are a few things to keep in mind. The terms of forbearance are dictated by your loan provider. Read carefully the eligibility requirements and the repayment implications and make sure you understand the length of time during which deferrals are allowed. Additionally, it is important to understand that forbearance is not forgiveness. Taking advantage of this does not mean you are not responsible for repaying the full amount of the loan, it simply means the term of the loan is being extended to accommodate a period of time without payment.
5. Are there any things I shouldn't be doing with my money right now?
Spending in line with your pre COVID spending habits. This applies to everyone, but especially to parties who have already seen their income impacted by the changing economy. Given the lack of clarity on when things will begin to revert to something a little more normal, I recommend being honest about what you “need” and being a lot more conservative with spending, no matter how tempting it is to place your 63rd order on amazon.