By Steve Doster
As we head into our third week of social distancing, more and more of us are feeling the anxiety related to staying at home. Whether you are working from home, have unfortunately lost your job due to this crisis or are simply feeling isolated within your four walls, we all are dealing with some kind of stress.
If you are one of the affected individuals who may have lost your job or seen a reduction in your salary, this has you seriously worried about making ends meet. Although Congress has put together an emergency plan to help individuals affected by the coronavirus pandemic, there are a few things you can do on your own to maximize your cash flow.
- Prioritize bills – Now is a good time to prioritize your bills and make a list of what is critical and what isn’t. You should also consider cancelling auto-debit on your payments so you can effectively manage your cash flow. Contact your service providers as many of them may offer an option to skip payments or make fixed payments during these times.
- File your tax return as soon as possible – If you are typically owed a refund and have had no major changes in your tax situation in 2019, then file your tax returns as soon as possible. The IRS has currently extended the filing due date from April 15th to July 15th; however, you are still able to file your returns now and get a refund. Additionally, the new stimulus bill requires your 2018 or 2019 tax return be filed in order to qualify for stimulus checks.
- Delay mortgage payments – If your mortgage is owned by Fannie Mae or Freddie Mac, you may be able to suspend mortgage payments up to 12 months if you have been affected by the COVID-19 crisis. To find out if Fannie or Freddie owns your mortgage, you can search your address at makinghomeaffordable.gov.
- Transfer credit card balances to a new credit card with 0% interest – Find out what the transfer fee is, typically three percent of the credit card balance, and ask the credit card company if the transfer fee can be reduced or waived.
- Halt student loan payments – The Department of Education has temporarily reduced student loan interest to 0%. In addition, it is also providing borrowers with Federal Direct and/or Federal Family Education Loan Program loans the ability to suspend payments for 60 days without hurting their credit. If you would like to halt payments, please contact your service provider to do so.
- Unemployment insurance – One important thing to note is that you don’t have to lose your job in order to be eligible to receive unemployment insurance right now. If you are quarantined or furloughed or even just not being paid right now but expect to return to work eventually, you may be eligible to receive unemployment insurance. Eligibility and benefit amounts are state specific and changing with the new stimulus bill.
- Health insurance – If you have lost your insurance coverage at this time, please remember to purchase a new policy at CoveredCA.com. Several states such as California, New York and Washington have opened enrollment to allow people to purchase subsidized health insurance. Based on your reduced income for 2020, you may be eligible for a policy with reduced premiums.
- Stop withholding taxes – You can stop withholding federal and state taxes on current paychecks. This will give you more income in hand and you can catch up on tax payments by increasing withholdings toward the end of the year. This will work well for couples where one has been impacted but the other is still getting paid.
- Stop 401(k) contributions – Don’t feel guilty, it’s ok to stop retirement savings for a few months if you need the cash flow now. It is better to halt savings than to acquire credit card debt. Again, this works well for couples where one is impacted and one is still receiving their full earnings.
- Businesses currently hiring – Retail giants such as Walmart, Amazon, and Target are hiring. They are conducting online interviews and placing people into roles quickly. Delivery companies and regional supermarkets like Vons are also employing in large numbers.
- There are several free resources available during this time –
- United Way of San Diego County is offering emergency assistance to low-wage workers affected by pandemic-related layoffs or reduced working hours to help pay utility bills and housing payments. Applications for the San Diego Worker Assistance Initiative can be found at https://uwsd.org/covid19/.
- ICIC has created a Small Business Resource Center (SBRC) which hosts several national and local resources aimed at supporting small businesses through the COVID-19 crisis. Visit this resource here: icic.org/small-business-resource-center-covid-19-crisis.
- For affected restaurant and gig workers, please visit: restaurantworkerscf.org/news/2020/3/15/resources-for-restaurants-and-workers-coping-with-the-covid-19-emergency for resources.
- San Diego Food Bank is also assisting affected individuals and families with meals. For additional details please visit: hsandiegofoodbank.org/gethelp/.
- The National Domestic Workers Alliance is offering a one-time grant of $400 for nannies, home health care givers, and housecleaners that have lost work due to the crisis. File an application here: domesticworkers.org/
— Steve Doster, CFP® is the financial planning manager at Rowling & Associates – a fee-only wealth management and CPA firm helping individuals create a worry-free financial life. Rowling & Associates works to a fiduciary standard of care helping people with their taxes, investments, and financial planning. Read more articles at rowling.com/blog.