How can you save your finances in light of coronavirus?
Friday, March 27, 2020 – Since the coronavirus derailed our lives, many Americans are facing an uncertain financial future. Worldwide, economies have come to a screeching halt as we’ve made sacrifices to slow the spread of this deadly virus. All of us are now navigating uncharted waters, and most of us have questions about what happens next with our investments, taxes, mortgages, rent, and other basic needs.
Needless to say, the current situation is volatile. Federal and state governments are scrambling to assess the quickly changing outlook and to come up with solutions. In the meantime, there are a few things we can share that may help. Keep in mind that what’s true today may change tomorrow. The best way to manage your money in your individual situation is to consult with a financial planner.
How do I file for unemployment?
Every state is different, but most if not all states are changing requirements for qualifying for unemployment benefits. Most states have relaxed the rule that has, in the past, required you to look for work while you are unemployed.
Click here to find out if you are eligible for unemployment benefits in your state.
Even though there is now an extension for filing taxes, can I still file now?
Yes. If you file sooner, you will get your refund sooner. You do not need to wait until the extended July 15 deadline. The April 15 deadline was bumped back because many people are not able to meet with their tax preparer due to stay-at-home orders.
Will my credit score be affected if I defer my mortgage, auto, or student loan payments?
There is not a single simple answer to this question. If your mortgage company or other lender is offering a relief program, check the terms. If you are struggling to make payments, the key is to call your lenders — all of them.
Overcommunication is better than undercommunicating. Let them know your situation. Chances are good that they will work with you and that, if they are offering a program for borrowers, it will not affect your credit. However, do consider just how much a deferral may cost in interest payments. Some lenders are agreeing to defer interest while others are not.
What about my retirement investments?
Unfortunately, investments in every sector have been hit hard by the world economy due to coronavirus. At the same time, oil prices, which have long been a bellwether investment in many markets, have crashed due to a pricing war between Saudi Arabia and Russia. Wall Street has crashed harder than it has in decades, and although it has been tempered by a few days of gains, it may be a few weeks until it’s back on track.
According to financial planners we’ve spoken to, selling stocks now is almost always the wrong move, simply because selling while investments are low is rarely better than riding out the storm and holding on until this crisis is over. Check with your own financial planner for the best advice for your investments.
How will the government determine my benefit?
According to the most recent information, your 2019 tax information will be used to determine your stimulus amount. If you have not yet filed your 2019 taxes, your 2018 tax information will be used. It is not too late to file 2018 taxes if you have not yet done so.
How soon will I get a check from the federal government?
The details of the federal stimulus plan, including who qualifies and how the government will determine who gets what benefit, are still being hammered out. Estimate your potential payment here. As difficult as it may be, expect that you’ll need to be patient. If you are in need of food or other basic needs, check your area for programs that can help. Also, many electric, gas, phone, and utility providers are maintaining services for people who are unable to pay. You do need to call them to enroll in relief programs, however.
Where will money come from for the recently approved federal stimulus programs?
Like any federal program, the nearly $2 trillion federal stimulus will be paid for by us, the taxpayers. This is precisely the type of “emergency” that emergency funds are intended to cover. Unfortunately however, the United States had a $984 billion budget deficit in 2019, up 26% from 2018, due largely to corporate tax cuts passed in recent years, and we do not have contingency funds for crises like this. We will all likely need to make sacrifices in coming years to compensate for this emergency spending.
What happens if this crisis lasts longer than a few months?
Unfortunately, balancing the economy and our health is tricky and troubling at this time. No one knows how long it will last, but experts seem to agree that we can play a role in minimizing, or at least slowing the spread of coronavirus so that our hospitals can keep up with the influx of sick patients and lives can be saved. Also, the sooner we contain it, the sooner we can begin to return to our normal lives.
If the crisis continues beyond the projected few months, we will all have to continue to work together, as we have many times, as communities and as a nation.
