SAN DIEGO, April 16, 2020 (Newswire.com) - With over 22 million Americans filing for unemployment this week, there's no denying the economic repercussions of social distancing are creating a financial chain reaction. Steve Sexton, financial consultant and CEO of Sexton Advisory Group, shares some practical money management tips to stay afloat during uncertain economic times:
- Take stock of emergency funds and backup reserves. An emergency fund is something people should already be saving for – unfortunately, the reality is only 41% of Americans are financially prepared to cover a $1,000 emergency. Individuals without emergency funds should consider pulling money from other low-interest accounts, like savings or CD accounts. This is also a good time to ensure all savings accounts are FDIC-insured.
- Reduce expenses. Even with an emergency fund, the unpredictable nature of this pandemic means people should be more conservative in their spending. This is the time to reevaluate cable bills, cancel wine club memberships and app subscriptions and scale back on pre-packaged foods.
- Look into extending payment due dates and waiving late fees. Chase, American Express, Capital One, and Discover are among the credit card companies that have offered to provide assistance to those financially burdened by the pandemic.
- Don’t panic buy. During these uncertain financial times, it’s especially important to avoid over-buying anything on credit cards, which can quickly lead to high-interest debt.
- Look into mortgage loan forbearance. For those concerned about making mortgage payments in upcoming months, loan forbearance could help. This is an agreement made between a lender and delinquent borrower in which the lender agrees not to exercise its legal right to foreclose on a mortgage and the borrower agrees to a payment plan that will bring the borrower current on his/her payments.
- Stay focused on the future. The new stimulus package now allows Americans to withdraw up to $100,000 from their 401k or IRA accounts without the typical penalties, but many don’t realize this option should be considered as a last resort. If possible, continue funding these accounts and stick with regularly scheduled retirement plan contributions – this is a long-term strategy that will very likely pay off in the future.
Source: Sexton Advisory Group