Creating an Emergency Financial Plan in The Middle of an Emergency
As those of us are furloughed or laid off, and not earning an income, we need an emergency plan.
It’s always good to have an emergency financial plan before a crisis, but many of us don’t look at our money that way. In fact, 78% of U.S. workers live paycheck to paycheck.
I haven’t been to work in almost three weeks, and don’t anticipate returning to work anytime soon. As like anyone else, I still need groceries, pay for a roof over my head, and use transportation to get to my essential needs errands.
I highly doubt I qualify for a stimulus check, because of their strict parameters that I fall outside of… along with how many others in this country? I can’t rely on the government to help me, which has created this feeling of abandonment. If we support the government financially to keep them running, why shouldn’t the government support all of us when we need it? This feels like a one-way relationship.
Regardless, there are some emergency tactics you can put in place right now to contain your cash during the coronavirus.
Make Money Decisions While You’re Calm
Getting stressed out over money will nudge you to make bad choices. So, if you’re going to panic, that’s okay. Sometimes this panicky feeling is motivation to DO SOMETHING. However, let it run its course before making any major decisions about your money.
As a life transition is happening, it’s best to remain positive and keep your head so you can think clearly about your next steps. You don’t want to do something you can’t ‘undo’ while under a lot of stress.
Give it a little time for the shock to wear off. Once the situation becomes more familiar, figure out your next steps.
Find a Way to Budget Your Money For The Short-Term
First, you need to know how much money you currently have, and what are your upcoming bills. If you don’t use a budgeting app, then you can write it down with good ol’ pen and paper. If you are interested in a budgeting app, or have even paid for one but not used it yet, start getting to know your budget this way. There are also many financial apps that will let you trial them for a period of time before purchasing (‘You Need A Budget’ is my favorite budgeting app).
Put Your Needs First
There are three things you will need, that you desperately need, and that’s food, shelter, and transport. And if you really think about it, there’s only two: shelter and food.
So, start with your emergency needs to keep you alive and healthy. That doesn’t mean you ignore your other bills, but in an emergency, you have priorities.
Your wants will have to come last for right now. However, when you restrict yourself, you may find how little you can live on.
When you work on your budget to pay for your needs (and don’t pay for them yet, I’ll tell you why shortly), you can see how much your money will stretch. If you live paycheck-to-paycheck, your money will probably stretch about two weeks. This is why you will need to buckle down on your money, because your emergency may not resolve within that time. Make every penny count in your crisis management.
Cancel any unneeded, unused or non-emergency services.
This can be anywhere from the housekeeper to your gym membership to your magazine subscriptions, and everything in-between. If you are in a true emergency, you will not be able to afford these little luxuries, and it’s best to cut off all incidental payments.
Defer and reduce payments
Right now, it is really easy to defer payments. Mortgages, car payments, student loans, credit cards, look at anything that you pay for monthly and that you aren’t able to cancel, or is essential to your living.
Depending on your lender, you should inquire about defering payments. This can be as easy as going online to request deferment of mortgage and car payments. Other types of accounts may include filling out an application for hardship — medical bills can be a call to the billing office to come up with a payment plan, even if it’s only $10/month. Student loans, again depending on your lender, may have an economic hardship application and deferment process. Stay with it. A little footwork can ease the bills for the time being.
If you have other loans that will not defer or reduce payments, such as credit cards, then at the most, pay the minimum payment. However, call them and let them know your situation. It may take a lot of time and frustration to get through to someone. Don’t give up! My motto is that if you haven’t gotten an answer, you haven’t made enough phone calls.
Start a side hustle
It’s really difficult, but not impossible, to start a side hustle right now. You have skills, start trying to find somewhere you can use those skills. This answer is so individualized, I can’t begin to give advice on where to start, except with the internet.
I have a co-worker who’s a social worker, and has been furloughed (like myself) during this pandemic. She got online and found a platform to teach English to non-English speakers. She is mostly working with people from Saudi Arabia right now, and is learning a lot while she teaches and earns some cash. And she loves it. The wage is not sustaining, but it gives her a little extra money for now.
You can usually do something to give you an extra bit of cash. Find whatever works for you that’s legit and you know you get paid for your services.
Ask for help
With so many people in hardship right now, this is the time to help each other. If all else fails, lean on others to help you through the crisis. It can be an online connection for resources in your community, reach out to churches, non-profits, family and friends to see how you can help each other. Look into government aid for food, medical insurance, and treat others with respect whether you are relying on them, or they on you, and expect the same.
Most of all, know that during the crisis, your emergency isn’t forever. Emergencies never are, they are temporary situations you must get through, so remember that better times are ahead.