By Kristi De Rycke, Registered Assistant
Nothing is normal right now. Children are home with no school for what looks like months with limited access to playing with others. Working adults are either out of work, working from home or scared to go to the essential jobs that we have. Retired adults are probably the most isolated as they are heeding the warnings that they are currently the most at risk if they get sick. This monster called the Coronavirus has turned our lives upside down and inside out. We are all living one day at a time not certain what tomorrow will bring but hoping it will improve very soon.
These times are far from typical. When we look back on our lives, this very well may rank as one of the most difficult. Teachers will be teaching future generations about this in school. What does that matter to us now? We are just trying to survive this week. How do we adjust right now to get through this difficult time? Consider ways of possible additional income, creative ways to cut expenses and tapping your savings if this is needed.
You may be one of the many people that have been laid off, struggling with reduced hours, overall decreased income or higher than expected expenses right now. Maybe you are self-employed, and business has slowed to a halt. Let’s first tackle the income side of things. The uncertainty of how long this will last can make things even more difficult. If only President Trump’s claim of this being over by Easter would have been more than a pipe dream. Many organizations have had to really think out of the box to provide a similar service with the new restrictions. Could you adjust the way your business functions to bring in some income? Keep in mind that while some businesses are closing, others are desperately looking for more help. Would you be willing to do something out of your current skill set to get through financially? Many grocery stores are currently hiring. Hy-Vee had an overhead announcement on a 3-minute feedback loop advertising their need for personal shoppers. There is a need for cleaning, food restocking, food delivery, etc. Maybe the risk of that much personal contact is not worth the income for you. There are other less contact jobs available as well. Consider checking with industries that are currently trying to keep up with new demands. Are there online or phone calling jobs available?
Let’s brainstorm what you can do to make any incoming dollars stretch as much as possible. We should first tackle the big expenses. The CARES Act was supposed to provide relief for mortgage payments for up to a year. There has been a lot of confusion in this area. Consider reaching out to your lender to determine options. If you don’t get a clear answer, reach back out in a week or two as things become more defined. Also ask about refinancing options as this may be better for your current situation. The CARES Act does have a section that allows most student loans to not be paid until the end of September. Interest will not be accrued during this time. Many credit card companies including Chase, Capital One, Discover and Citi are allowing some flexibility with payments. See the Bankrate site for information on other companies or call your credit card company for specific options. Several auto companies are adjusting their loan requirements including Chrysler, Ford, GM, Nissan, Toyota and many more. (2) Use the resources provided to gather information and then reach out to your specific loan companies for options for your current situation.
During these difficult times, change is truly the only constant. We have already adjusted to living very differently than we did in February. Consider going through your expenses line by line for your business or personal accounts to determine any that you could cut for a few months. These will be hard things to do but may be necessary. Is there anything in your current budget that could go? Can you stretch your groceries? Can you cut heating costs? Could you cancel subscriptions? Do what you can do to cut ongoing expenses.
Maybe you find yourself in the category that is not available to work another job right now and struggle to find enough money in the budget to cover needed expenses. That is okay. Please take any bad feelings that you put on yourself out of this equation. Remember that emergency fund. This is an emergency! This is the rainy day that you saved for! This may be a time that you will have to tap your savings. You could start with a savings or individual brokerage account which is the most liquid. You could consider taking the small hit on a Certificate of Deposit to get access to the money. There are options within the CARES Act to withdraw money from your 401(k), 403(b) or IRA. There is an option for a distribution that will be penalty free, but you are taxed on the money. The taxes will be paid back to you if you put the money back in within 3 years. You are also able to take out a loan of up to the lesser of 100% or $100,000 out of your employer sponsored plan only (not an IRA). This loan does need to be paid back within 5 years. Be cautious on this option as if you must leave your employer for any reason, that will have to be paid back in that year or you will have tax consequences. (3)
The CARES Act did provide for a recovery rebate for every adult to receive $1,200 and $500 for children 16 and under. This amount is adjusted for couples making over $150,000 and individuals with income over $75,000. These rebates will be either direct deposited or mailed to you in the next few weeks based on how any tax refunds were set up. Keep in mind as you are choosing how to spend this check that this recovery could take several months. When things do reopen and the economy starts to move again, there are still a lot of uncertainties about how this will happen.
These recommendations come with the understanding of how difficult things are right now. Everyone’s unique situations include various stress factors. Every single one of us is struggling with adjusting to our “new normal” in different ways. It seems like every day gets more challenging than the previous one. We will get through this!
A heartfelt thank you to those that have the option and are staying at home to prevent the spread. Thank you for those that are adjusting their businesses, workflows and processes to adjust to this virus. Thank you to the workers who continue to risk their lives producing or delivering necessary items. We appreciate those that are stocking shelves during times that no one wants to be in contact with others. Our gratitude is extended for those that are patrolling the streets, responding to emergencies, checking in on home-bound people, caring for the sick and all of you that are attempting to adjust in this difficult time. We are here for you!
By Greg Johnson
This will certainly never be forgotten and as we continue to face unprecedented times do not let it be an excuse or reason to take you off your path in life. You have goals and those still exist, so use all the tips Kristi has put together to make sure you are still on track to reaching them. I echo the thank you’s to all who are doing their part on the front-line and all of those who doing their part in social distancing. We will overcome this, and a normal will return. Hang in there!