Money moves to survive a coronavirus recession
The coronavirus pandemic has forced offices, factories, retailers and other businesses to close and downsize. In a recent NPR/Marist poll (PDF), 18% of households said someone had been laid off or had their hours reduced.
If you’re affected by job loss, find out immediately if you qualify for unemployment insurance, says Ryan Marshall, Certified Financial Planner in Wyckoff, NJ.
Be aware that states have different rules governing unemployment insurance eligibility, depending on your income, length of work, and other requirements. Generally, if you have a W-2 income, you are more likely to qualify, unlike gig workers. To verify your state unemployment office for more details – and persevere because many offices are overwhelmed right now.
Keep in mind that unemployment checks are usually less than half of your previous earnings and usually last four to six months (PDF).
Negotiate with your creditors
If you find that you are unable to pay your monthly bills (credit card balances, mortgage payments, etc.), start exploring ways to ease the burden.
If you have credit card debt, for example, one option may be to take advantage of a balance transfer card, which will allow you to pay no interest on the amount you transfer for a year or more. Remember that you will need a good credit score to qualify and you should be able to pay off the balance before the zero rate expires.
But if you’re too far behind, it’s time to negotiate. “Pick up the phone and call, or chat, or email, and let the creditor know you’re struggling financially,” says Justin Pritchard, a certified financial planner in Montrose, Colorado. “Ask what payment options or plans they have, or if they’re willing to defer payment.
Chances are the creditor will be accommodating as the financial crisis is widespread right now, says Greg McBride, chief financial analyst at Bankrate.com. Most banks are willing to work with borrowers in financial difficulty. Ally Bank, for its part, is deferring payments for auto and mortgage customers up to 120 days. And other financial services companies, such as Bank of America, Citibank and Geicoare make similar arrangements– but you have to ask.
Find relief programs
Some states, like New Yorkput in place policies to temporarily suspend evictions and certain types of student loans and medical debt, as well as prevent power outages. California is stop the evictions. The Federal Communications Commission is also asking carriers to refrain from telecom cuts. Check your local news for announcements.
For those with student loans, the White House said it is waiving interest on federal student loans, as well as ceasing collections on delinquent loans, for 60 days. The change will not affect your payment amount and this money will be used to repay your principal. You can find More details about these moves to the Institute of Student Loan Advisors, a nonprofit organization that advises student borrowers.
Taxpayers will also have some leeway. The White House has announced that the IRS will extend the April 15 tax deadline. to July 15giving most Americans an extra 90 days to file their returns and send in their tax payments, as well as contribute to their individual retirement accounts. If you’re expecting a refund, however, file as soon as possible, Marshall says.