Immediately implementing proactive measures can reduce the damage and diminish the financial crisis that lies ahead because of the Coronavirus pandemic. Here are ten actionable steps that can minimize the impact of lost or reduced wages due to the quarantine, illness, or other implications of the COVID-19 to work on immediately.
- Revamp the household budget and adjust spending based on any remaining income. The budget is the first line of defense because it can direct revenue to the highest financial priorities. Reassessing the household budget will establish minimum salary needs and uncover ways to cut back on spending to meet the revenue gap. When income collapses, housing, food, and health care become the top priorities.
- Stop payments to long-term financial objectives like retirement or college savings accounts.
- Pause automatic savings withdrawals into vacation funds, Christmas accounts, or other annual savings goals that remove money from the budget.
- Audit all automated subscriptions and cancel any unnecessary service for 90 to 120 days. Most companies offer account holds without cancellation at no cost. Services might include gym memberships, premium cable or satellite channels, upgraded internet services, or streaming movies, games, or music services.
- Move all monthly bills to minimum payments, including credit cards, mortgages, and student loans.
- Lower household expenses. Eliminate discretionary expenses through a line item audit of all service bills to identify ways to lower otherwise fixed costs. For example, smartphone bills may contain monthly service fees for unnecessary apps. Eliminate all unnecessary expenses, like clothes purchases or car repairs that can wait 90 days or more.
- Look for ways to reduce utility bills by turning off lights, only running a full washer and dishwasher, and minimize water use. Lowering the thermostat or turning the furnace, air conditioner, or HVAC off on mild spring days can significantly reduce the power bill for the next 90 days.
- Save money on food costs. Eating at home, shopping every two weeks instead of every few days, and planning meals before grocery shopping are proven ways to lower food costs. Other ways to save on food include preparing meatless meals and using inexpensive ingredients like rice and pasta.
- Find a new source of income. Not all businesses have reduced staff. Grocery stores and pharmacies, department stores like Walmart and Target, and all jobs related to the healthcare industry are rapidly expanding workforces to keep up with demand. Many currently offer weekly or monthly bonuses as hazard pay.
- Contact creditors for assistance. Given the enormity of the financial shutdown, creditors are working with affected consumers to waive fees, lower interest, or extend payment deferments for up to 120 days.
The loss of income can cause severe financial challenges. Immediately taking proactive steps can significantly impact the ability to survive during this crisis. Carefully review both income and spending looking for ways to increase income while lowering monthly expenditures during this time of need.
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