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The spread of the COVID-19 is currently forcing people to change their spending habits. A serious illness and income loss can put any family in a panic. Not knowing when you will be feeling better or when your income will return to normal can give added stress to an already stressful situation.
Feeling helpless during this time is not going to make the situation any better. Having a plan of how you are going to budget your money can bring peace and some added comfort.
Unfortunately, bills don’t stop. Even if your mortgage company or utility company is allowing you to delay your payments that is only a short-term solution to what could be a long-term problem. Keep in mind, if you have the money to keep paying all your bills you should. Yeah, the mortgage company might allow you to delay your payment a month or two however they will expect their money. The “pause the payment” offer some businesses are promoting is not a “I don’t have to pay offer”. It’s better to continue making your regular monthly payments if you can then to have to come up with two or three months at one time in the future.
Protect your financial position now.
If you’re freaking over how you are going to survive, then this blog can help you. I am going to give you 5 tips for dealing with a financial crisis and getting into a budgeting mode.
1. Write Down All of Your Bills
The first thing you have to do in a financial crisis is write down exactly what your bills are and how much each payment is. Seeing everything that will be due can help prioritize what should be paid first.
- Mortgage/Rent
- Utilities
- Phone
- Car Payment
- Car Insurance
- Credit Cards
- Loans
- Cable/Magazine/Monthly Box/ Subscriptions
- Gym Memberships
- Eating Out
- New Clothes
- Lawn Care
- House Cleaning Services
- Hobbies (that cost money)
- Kids Sports/Activities (that cost money)
- Entertainment
Generally, you pay all your bills, put money in savings and pay towards debt etc. We are in financial survival mode so we must get on a strict budget to ensure that your family is taken care of.
Next after you write everything down, you are going to only keep the bills that are necessity right now. Home, utilities, car, etc. You will need to call and cancel or pause all memberships or subscription services. This would include cable, Netflix, hulu, etc.
Our goal is to ensure you have a roof over your head, lights and water on in your home and food for your family. Everything else comes after those items are paid.
Keep in mind, you’re in financial crisis mode now. Anything that doesn’t fit into one of those area might not get paid if there is not enough money in the budget.
2. Determine Exactly How Much Money You Have
See what is available in your checking account, what you have coming in for income and what is in your savings account. Budgeting after an illness or job loss could mean you don’t have enough to pay everything.
This is where tough choices can paralyze some people. You must ensure you only account for money you already have or know you will have (for hours worked). Don’t assume you will have more because that will not make your budget balance if that money is not there when you need it.
I know that sounds like very strict and tedious, it is because we have no room for overage.
3. Learn To Meal Plan And Cook At Home
The biggest expense most families have that can be cut significantly is groceries. Have you ever went to the store and got a ton of groceries to end up clueless on what to cook and you end up ordering a pizza for dinner? When you are on a cut-throat budget you will not be allowed to do that. In order to feel like you are in control you need to have a meal plan. Planning what you need to buy and when to cook it takes the pressure off of what to eat at the last minute.
Another benefit to meal planning is no food will go to waste. If you cook a whole chicken one night, then the next night you can have tacos with some of the leftover meat, another night you can make chicken stew. The idea is to manage the meals around the food stretching, that is why meal planning is a must for any budget.
Don’t forget to include snacks too. If you are like me and you have kiddos home during the crisis they want to snack. Make sure you budget snacks that will be healthy and satisfy your children.
4. Increase Your Income
If you have cut your budget to the bare bones and reviewed what amount of money you have and there is not enough then you must get more income. I know, I know you are thinking I just loss my job how am I going to increase my income. Well, there are a few options to bring in some more money to help you during this crisis.
- Look at your assets: do you have anything that is paid for that you can sell for cash. A spare car, purses, shoes, jewelry, dvd’s etc, Go around your house and find everything that you can sell and list it on Facebook, Craigslist, Offerup, Poshmark, Mercari, Let It Go, Ebay. Make sure you look over the items and that they are in good clean working condition.
- Check online job sites like indeed.com, careerbuilder, monster for an opening that you could apply for. If you are not able to leave your home then you can check out online job sites like Fiverr, Upwork or People Per Hour.
5. Call Your Creditors
If you have rounded up all the money you can and still are not able to make ends meet than your next step is to call your creditors and discuss pausing or lowering your bills. Explain what your situation is and ask what options they have available to you.
Creditors want you to pay, however they understand with the way things are in the economy and unemployment numbers skyrocketing daily they will work with you. They understand you are not the only one going through tough times right now. You may be able to qualify for a hardship program, you won’t know until you ask.
Work out a payment plan. If you are not able to cover the full monthly payment yet you are able to pay something then discuss payment plan options. When I worked as a finance manager I was always of the thought “something is better than nothing” showing effort to make some payments even if partial shows your creditors that you are not avoiding the debt.
Final Thoughts…
Making budget cuts can be hard especially when it’s beyond your control. When times are tough you need to make decisions that are tougher if you don’t have enough to pay everything.
Remember prioritizing what’s most important, shelter and food.
If you are only able to provide shelter then you can look into assistance for food. There are plenty of local churches or food banks that can help you out during this hard time. Don’t be afraid to call and ask for help. A lot of people are going through a humbling time right now and there is no shame in asking for help when you need it.
Then when you rebound on your feet you can pay it forward to someone else.
Do you have any advice on how to handle a financial crisis?
It’s hard to know what to do when your finances change. Having a budget plan can make a huge difference in how well to handle it.
Have you experienced a financial crisis? What advice or tips do you have?
