How to Manage Your Money in Coronavirus Crisis : Here is a framework for the order in which you can access money for short-term expenses in general if you’re really in a crunch as well as some other ideas for reducing expenses and again the prescription varies a bit depending on your financial capacity.
Obviously if you have your income that’s your primary source of cash flow but as we discussed in the last Article you also need to ensure to review your expenses prioritize what stays and make trade-offs about which expenses get outright eliminated or reduced whether.
You start to cut into your expenses or not will depend on the urgency of your situation if you have no financial cushion and especially if you think your income is in imminent danger. You’ll want to start making reductions in your expenses right now.
If your household loses income through reduced work or loss of employment and your expenses now exceed your income sources the first place to access funds would be an emergency funds. If you have one that’s what they’re there for but if you don’t have one now is not the time to worry about that there’s no point.
Let’s think about what your realistic options are at this point if you did sign up for any type of credit balance protection insurance you may have a benefit where your minimum monthly repayments are covered by these policies.
If you become unemployed involuntarily check to see you can also check to see how to claim the benefit if you have it that may save you some additional cash flow right now which is sorely needed file your taxes early while the tax filing deadline has been pushed out you may still want to file your taxes early especially.
If you have a refund coming to you it may also allow you to get the appropriate income support for many measures announced by the government in response to Covid 19 now everybody’s situation is different so I’ll lump a bunch of sources of funds into a general category of not ideal.
But do this before racking up credit card balances one option would be to look at accessing funds through any low interest rate sources of debt that you might have access to so this would be like a secured line of credit or unsecured.
Which would have a slightly higher interest rate as there is no collateral generally the repayments are going to be interest only meaning that the minimum required monthly payments are going to be low be careful not to use it more than you.
Absolutely need to you may have access to a lot of credit and by the way that may be changing but you have to use it only sparingly for now, this can be an effective cash management tool for short-term cash crunches.
However so long as you can keep on top of things you could use balance transfer offers to buy you a payment cycle or two if things get really bad this is when a financial institution offers a promotion to transfer your balance from a higher interest rate.
Source of debt to their institution usually with a low interest rate introductory offer be careful it can turn into a slippery slope and be mindful of what those transfer fees might be also this may actually become harder to do as I suspect consumer.
Credit is going to get tighter going forward another option is to obviously see what support is available from friends and family it’s a tough road to go down but if you have parents who have benefited from a major bull market and housing.
For example they may be able to help you out if they’re sitting on a lot of home equity for example every family situation is different and this may not be an option for you and also be mindful that friends and family may be struggling right now to sell stuff toys.
Go first then the harder stuff if you need to be proactive in contacting institutions businesses or other people that you owe money to you may be able to negotiate payment deferrals or payment reductions and this is not only for helping managing your cash flow.
But also for theirs in the case of small suppliers who are also nervous about their cash flow financial institutions have indicated that they may be able to offer different types of assistance this may come in the form of mortgage payment.
Deferrals may be alone like a bridge loan for example but note that in these early days there’s a lot of broken telephone you may need to try multiple times unfortunately before you can actually connect with someone. Who is up to speed on the institution’s ever-evolving policies if you have long term savings.
You may not have the luxury of agonizing over whether or not you want to sell them or not because of what’s happening in investment markets. I will post a separate article on that for those who don’t have short-term funding emergencies right now.
But for those of you that do of course you’re gonna tap into this if you need to if you can sell just what you need to access in the short term and also if your time horizon for your long term savings is now short-term you need to reevaluate your risk profile.
If you think you may need to continually tap into this source of funds once you’ve gotten through all the above options and there may be more you may be left to caring or increasing the balances on your credit cards hopefully.
That would only be temporary but these are last resort options and you know sometimes you have to do what you have to do. I get it don’t beat yourself up over that right now it is what it is you may find that you’ll be in a position to miss some payments as well and it’s going to be very stressful for some people and again it’s better to contact.
Those creditors first you may have more options than you think don’t forget to check out my previous article which talked about some of the other steps that you can do to make sure that you have as much runway as you can for your situation and for you to get some clarity on your financial situation.
It’s very important to do that if your situation is very overwhelming to you it is okay to talk to an insolvency trustee. I have never heard of someone contacting one too early I’ve only ever heard of people who wish they had made the call sooner.
I hope everyone is managing the best that they can right now stay tuned for more article I’ve had questions from people who want to know what to do with their money investments who don’t have a need to access these funds for emergency spending right now but rather want to know what to do for their long-term money investing that will be coming up shortly in another article and If you have any specific questions please do send them in to me and I’ll do my best to get to them all thanks for read this Money Pip Article.
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