NEW YORK—Lives are on hold all over the world as we distance ourselves socially to contain the coronavirus, but bills still pile up.
Some countries, like Italy and France, already enacted mortgage and rent relief, but U.S. measures are still being worked out for the most part, aside from a waiver for student loan interest.
Now is not the time for lectures on the value of having an emergency fund.
“You can’t just go pick up a side hustle right now,” said Erin Lowry, 30, author of “Broke Millennial,” a financial advice book that attempted to prepare her cohort for a rainy day such as now.
Many people, regardless of whether they can telecommute, have had their hours cut, have lost their jobs or are facing some kind of financial crisis. We are at the point of making the best worst choices.
Here are some ways to prioritize.
1. Assess the damage
Do not think of this as budgeting, because the situation is changing so fast you cannot really think long-term. Take a breath and just deal with this month.
What bills are due? How much cash do you have on hand?
2. Stall fixed debt
“We want to share some ways we are here to help you in this current environment,” Citibank says on its coronavirus web page currently.
Take them up on it.
This goes for home loans, auto loans, student loans and utility payments.
“Landlords do not want property sitting empty right now, so see if you can work out a deal, like maybe you can pay 25 percent,” Lowry said.
During the 2008-2009 recession, Lowry encountered a woman who prioritized her car payment over rent, because she needed transportation to get to work. Her fallback was that she could sleep in her car. “That’s something that a lot of people are going to face now,” said Lowry.
No travel, no restaurants, no shopping sprees at the mall, no online shopping impulse buys.
Check.
We are all on spending austerity plans because of social distancing.
But there are some essentials you might have to front if you have job loss or reduced income.
“With credit card debt, the advice is always to pay more than the minimum, but when it gets down to it and all you can do is pay the minimum, that’s not the end of the world,” Schulz said.
The key is not to miss a payment completely. You will face fees and go into a penalty interest rate, above the already sky-high average of about 16 percent even after the Federal Reserve’s latest rate cut. In a recent survey, CreditSesame.com found that one out of five Americans missed a payment of some sort in the past 12 months. The average missed payment was just $38, but that still dipped a person’s credit score by 45 points.
“When there is financial crisis and uncertainty, managing cash and credit is going to be critical,” said Adrian Nazari, CEO of Credit Sesame. “You need to sort out the least bad option.”
