Millions of Americans have lost their jobs due to the coronavirus pandemic, with unemployment rates reaching numbers not seen since the Great Depression.
While some are receiving financial assistance in the form of unemployment benefits or through the stimulus check, people who are no longer working due to COVID-19 have to find ways to lower their spending until their financial situation stabilizes.
Most cost-saving advice focuses on making a budget and cutting expenses on things like going out to eat, but in this new reality, other steps are needed. These are some of the things that you can do immediately to lower your spending.
Lower your housing costs
For most people, their biggest monthly bill is their housing, either through their mortgage or their rent payment. If you have a mortgage, talk to your lender to see what can be done about changing your current payment plan, or about what steps you can take to request a forbearance, or a pause in your payments.
If you’re a renter, talk to your landlord to see if they will let you change your payment plan, if they would consider allowing you to use your deposit as a payment, or if you are planning to move somewhere less expensive, if they would be open to you ending your lease early.
In some parts of the country, there are new measures in place to make sure that people are not evicted during this time, so take a look at your local housing ordinances to see if there are additional protections in your community.
Defer your loans
Whether it’s your mortgage, your car payment, or your student loans, if you currently have debt, now is the time to call your lenders and ask them to help you come up with a plan. Each one will have different criteria, but whether it’s allowing you to take a break on payments, easing your interest rates, or letting you lower your monthly payment and extending the life of your loan, your lender would rather have you work out a plan than have you stop paying altogether.
Some credit card companies are lowering credit limits or even canceling cards that haven’t been used lately due to the crisis, so if you are concerned about how the pandemic could affect your finances, reach out to your credit card issuer to make sure your accounts are in order.
Get health insurance through Medicaid
If you had health insurance through your employer and after losing your job you no longer have medical coverage, you have the option of continuing your plan through COBRA, though you will have to pay out of pocket. If that’s not financially feasible for you, one option you may not have considered is Medicaid.
To determine your eligibility, the program looks at how much money you are currently making, not how much you used to make. “If you had a nice middle-class job with employer-based insurance last month, and now your wages have gone to zero or your income in your family has gone way down,” you could be eligible for Medicaid, Linda Blumberg, a health economist, told Marketwatch.
Pause your savings
Usually, financial experts recommend that people keep trying to save money even in moments of financial uncertainty, but right now, it is more important to pay essential bills to make sure that you have housing and food.
Nick Holeman, a certified financial planner, told CNBC that, instead of saving for retirement, people who are still working should temporarily stop contributing towards retirement accounts and set aside three to six months’ worth of expenses for an emergency fund. If someone in your family has lost their job but there is still some money coming in and you want to keep saving, build up that emergency fund first, and then continue saving for retirement.
Change your credit cards
If you have a credit card with an annual fee, call your provider to see if you can downgrade to a card without one. You won’t get the same level of rewards, but you also won’t be paying additional money to have a credit card.
If you are carrying credit card debt, consider opening a new account that doesn’t charge a balance transfer fee, or that has a low one, suggests Forbes. Many credit card companies offer six months or a year of 0% interest to entice new customers for certain cards, so in theory you could transfer your debt to a 0% interest card and give yourself a buffer.
However, there is a very big catch-- as soon as that entry period is over, you’ll be on the hook for a higher interest rate, so either keep chipping away at that debt, or have a plan to be able to make a lump payment to avoid getting hit with a large bill.
Call your phone and cable companies
Get in touch with your cell phone provider and your cable company to see if it’s possible for you to downgrade your current package, or to see if they are willing to give you a discount or set you up with a payment plan.
By that same token, take an inventory of the streaming services that you subscribe to, and see if there’s a way to consolidate them. You can cancel some temporarily and stick with just the one you use the most to save some cash.
So that you don’t miss out on entertainment, check out what your local library (or your school if you're in college) has available for free: many have partnerships with streaming companies like Kanopy or hoopla, which have apps that you can use to watch movies or TV shows on your phone, tablet, computer, and even television.
Trending Coronavirus Coverage From RADIO.COM
—Why your second stimulus check could reach you much quicker
—Social Security recipients will receive their checks this week
—CDC adds 6 new possible coronavirus symptoms
—When will stimulus checks be mailed?
—Woman contracts COVID-19 despite not leaving house in 3 weeks
—When all 50 states plan to reopen amid the coronavirus pandemic
—’Shark Tank’ investor Kevin O’Leary shares keys to small business survival