Experiencing a loss in income is an extremely stressful event that will leave you feeling lost and worried about the future. But you don’t have to do it alone — there are tools and resources available to make your situation manageable as you get back on track.
If you have loans at SESLOC, see what options are available to you through our special loan assistance programs.
If you are worried about paying your bills during this time, call our partners at GreenPath and talk with one of their financial experts. GreenPath is a complimentary service for SESLOC members — providing access to debt management services, and free one-on-one financial counseling and financial education tools. GreenPath financial counselors can help by creating a plan and talking with your creditors to find out if they have any options to help you. Some creditors may be able to extend your due date, waive late fees or offer a different payment plan option. Take a few moments to prepare before you call so you can clearly communicate your needs.
Here are some more tips and resources to help you start your action plan:
Prioritize Your Expenses
- First, you will want to know as much as you can about your expenses and start by making a list of all your expenses.
- Second, go through your list and identify your essential expenses. Paying for shelter should always be first priority followed by food.
- Then go through each expense and make a note of any you can delay payment or change the due date on.
- Review your living expenses and eliminate the things you can live without.
- Identify and total up all income sources and assets such as savings that may be able to get you through until you can resume working or replace your income.
- Look for a temporary job, companies that deliver food or provide essential services are hiring right now.
- You may also be able to save money on your debt by finding options to lower interest rates or reduce monthly payments. But be careful right now, scams are high. Don’t rush these decisions without talking it through with a trusted non-profit partner like GreenPath.
Draw on Your Assets, But With a Plan
- You may need to spend savings or take on short-term debt to make it through this difficult time. Create a plan for using those assets and refilling your coffers once you are able to resume working and replace income.
- Look to your “liquid” assets first, drawing on cash savings accounts and non-retirement investments. Working with your budget, determine how much you will need to draw to cover your basic expenses. Make a plan to pay back your savings when your income resumes.
- Consider whether credit is a feasible option. Taking on credit card debt or personal loan debt will come with interest rates, fees and a new monthly payment. Look for low interest rates, low fees and favorable terms; and plan for what a new monthly payment will mean to your budget. Be ready with a payback plan in your budget, if you do decide to use credit to get you through an unexpected income loss. The faster you pay off interest-bearing debt, the less you will spend on interest and fees.
- If you have retirement savings, you may be able to borrow against them or cash them out in times of financial hardship. However, retirement accounts may be lower than expected due to the current market volatility, so this might not be the best time to draw down retirement assets. And, a loan is preferable to cashing out, but if you lost your job, a loan may not be available. And there may be penalties up to 10% for cashing out a 401K before retirement age, and you may have to pay income taxes on any portion that you cash out. Consult with a tax advisor before going this route.
- Cashing out retirement assets should be considered a last resort, especially to pay unsecured debt for which there are better options available.
- Treat your use of your savings and other assets as a “loan” to yourself. Write a repayment plan into your budget as soon as you can replace income. I know it’s hard to think much past today since the situation is changing rapidly, but do keep track of savings you are liquidating so you can rebuild them later.
Are There Any Utility Programs in Place to Assist People at This Time?
While some states and municipalities have suspended things like shut-off of utility services, there is no national law or policy in place at this time mandating that all utility shut-offs stop and that utility companies cannot collect payments or that they should suspend them. There are several myths floating around social media and the like about this right now. People should check with their local government websites and communication centers for more information on things like utility shut-offs and payment suspensions. Often there are income requirements for these programs.
Is Student Loan Assistance Available for People Affected by the Cononavirus?
- The President announced interest waived on all federal student loans held by government agencies. This excludes private student loans.
- It’s not yet clear how student loan servicers will enact this, but it is expected to be automatically applied to existing loans, with no action by the consumer needed.
- On March 20th, 2020 it was announced that student loan payments can be placed in an administrative forbearance. Please visit studentaid.gov/coronavirus for the most up to date information. Learn more.
Anything Else People Should be Aware of to Protect Their Finances?
- Scammers are actively out trying to prey upon consumers and spread misinformation. Don’t click on links from sources you don’t know, rely on info from the CDC and WHO for accurate info, and be alert to “investment opportunity” scams, or debt settlement.
- Learn about SESLOC loan assistance programs.
- Learn about federal government disaster assistance programs for small businesses.
- Visit GreenPath’s coronavirus resource page for more tips.