There’s a lot of stress and financial anxiety these days. Knowing what you can control and what you are worried about are two different things. How you spend money during this time is one of the things you can control. The financial challenges that came with this pandemic are a prime example of why everybody needs a crisis budget. If you haven’t implemented or created a crisis budget yet—now is the time!
If you have no idea how much money you spend on a regular basis, now is the time to figure it out. It won’t be easy, but if you’re forced to stay home for a few weeks you’ll have some extra time on your hands.
Start by going through each of your credit card statements for the last 3 months and put every purchase into a category. Then go through your bank statements and do the same thing, putting each purchase/expense into a category. If you spent with cash, try to estimate where you spent it
Study all your categories and combine those that are similar. At this point you probably don’t want to have more than 15-16 categories. Total all your purchases in each category and divide by the number of months you looked at. This calculation will be your monthly budget.
Now go back and create your Crisis budget! The key is to understand what you were spending before the crisis, and eliminating everything that is non-essential.
The next thing to look at is groceries. It is so sad that people are hoarding groceries and non-perishables. Who is going to use all the toilet paper that has been purchased in the past couple of weeks?
With the quarantine period lasting 14 days it might not be a bad idea to go through your freezer, refrigerator and pantry and create a 14-day menu. If you are housebound you will already have the supplies for meals the whole period without going to the grocery store.
It’s a great opportunity to eat through all of those things that have been taking up space for the past months. Once you have depleted your food supplies, refresh the pantry with new things. Be creative—you may find some interesting new meals. Another good thing about eating through your pantry is that you can eliminate waste and have a potential for major savings right there!
We just had a great program on the financial pandemic with John Kennedy our Compass Financialguru, so listen to that podcast. In this time of turmoil, don’t be making changes to your financial strategies. This is the time to hold fast
If you lose income because of this crisis, the federal government says lenders should allow you to make partial or even no payments on your home mortgage for up to one year. If this applies to you. call your mortgage company to see if they can help you. Many banks have reduced or eliminated fees and charges. Each bank has their own plan, so you need to check with yours, don’t think you can wait for them to call you.
There are also some loan companies offering collections forbearance, which is a temporary postponement of payments. It is a form of repayment relief granted by the lender or creditor instead of forcing bankruptcy or foreclosure on property. It’s not always a good thing, because interest continues to accrue.
There are also credit card companies offering assistance plans. These plans may include waiving late fees, waiving returned check charges, eliminating interest charges, temporary interest rate reduction or allowing you to skip or defer payments without accruing interest
You need to investigate by contacting your loan or credit card companies and asking for their help. Be honest and upfront about your situation and ask direct questions to be sure you understand what relief is available to you. Write down who you are talking with, the date and the time and take good notes about what they are telling you – not what you want to hear! Be sure to document each call you made
The credit card companies and other lenders are probably not going to reach out to you, so if you do receive a call from a bank or credit card company, it could very well be a SCAM! If there is any doubt in your mind, take down their information and call them back, but use the phone number on your paperwork, not the number they called from or gave you.
All borrowers with federally held student loans will automatically have their interest rates set to 0% for a period of at least 60 days beginning March 13th. In addition, each of these borrowers will have the option to suspend their payments for at least two months to allow them greater flexibility during the national emergency. This will allow borrowers to temporarily stop their payments without worrying about accruing interest and it’s another way to focus on what is essential for the next few months.
For borrowers continuing to make payments, the full amount of their payment will be applied to the principal amount of their loan once all interest accrued prior to the president’s March 13 announcement is paid.
If you are still getting paid your normal salary, the next 30 – 60 days could be a great time to improve your financial situation. With so many activities curtailed, and people being told to stay home, it’s a great time to save, save, save, especially if you have large quarterly or yearly bills such as car or health insurance, taxes or other non-monthly bills.
If you are feeling stressed, take breaks from watching, reading, or listening to news stories, especially social media, which can easily mislead you. Hearing about the pandemic repeatedly can be upsetting.
Take care of your body. Take deep breaths, stretch, meditate, take a walk. Eat healthy, well-balanced meals, exercise, get plenty of sleep, and avoid alcohol and drugs.
Find an additional 15-30 minutes during the day to pray or read the Bible. Take time to call or send a card to that friend or relative you have been meaning to contact. Forget about the stress and instead sit down and play with the kids. Let them talk about what they are feeling about the whole pandemic issue and just be present to them.
Focus on Deuteronomy 31:6~ “Be strong and courageous. Do not be afraid or terrified because of them, for the Lord God goes with you; he will never leave you or forsake you.”
Join us on the Compass Catholic podcast for more about staying calm in this time of crisis. And watch the Facebook Live event with Caitlyn Kano, an Accredited Financial Counselor and Financial Fitness Coach.