Pandemic coronavirus leads to the fact that many people lose time and money, so it is important to know what you have the financial ability. This writes CNBC.
Almost 80% of Americans live from paycheck to paycheck, and many families say that they will be difficult to pay unexpected expenditures even $400. The loss of shifts or dismissal during this time may aggravate the already precarious financial situation of many people.
What can you do to make ends meet during a pandemic coronavirus.
1. Contact creditors right now
If you are concerned that in the coming months will be difficult to pay the balance by credit card, a student loan debt or utilities, the national centre for the protection of the rights of consumers recommends as soon as possible to contact your creditors and ask for permission to benefits.
Banks, including Capital One, Chase, Citi and Wells Fargo, ask their customers, are experiencing economic difficulties, contact them to see what they can do. A credit union also offers help on loans. In addition, you can subscribe to a tariff plan that can mean at some time a lower interest rate or lower fees and penalties.
Many utility companies, including major providers, such as ComEd, Duke Energy, FirstEnergy and PSE & G offer programs to support bills which can allow you to postpone payments until a later date.
If you have student loans, contact your service provider to find out what you have options.
2. Create an “emergency” budget
NCLC also recommends that you create a “leaner” version of your typical budget, which is reasonable, regardless of whether you currently have difficulties or not. But this advice is doubly important if your work hours reduced, or shift abolished in the coming weeks.
For this “make a list of all your current obligations”, says NCLC. — Outline everything they need to see how much you can really save if you pause the subscription on a channel will limit the travel and to prepare meals at home.”
3. Consider a personal loan
The amount of the personal loans average from $10,000 to $20,000, with the usual term of three to five years. They can help in times of lack of income. They offer banks, credit unions and online lenders such as SoFi and Payoff.
The better your credit rating, the lower will be the interest rate that will be offered on the loan. Average APR offered to borrowers with credit rating above 760, is slightly less than 10%. This is considerably less than the average interest rate on the credit card in the amount of 0.08%, which may make personal loan better option than using a credit card in case of emergency.
If you already have a personal loan, contact your Bank, where you can offer more favorable conditions.
You can also get access to a credit line of equity capital and to borrow the cost of your home, if you have one. But be aware that this strategy has potential disadvantages, including the upfront cost and potentially high interest rates if you have a good credit rating.
4. Use the product with the lowest interest rate
Use your card with the lowest interest rate that you pay less interest when settling the bill. Even a difference of a few percentage points can save you a lot of money when paying interest.
One of the options: to look for deals with low interest, be it credit card or credit line with 0% APY for a certain period of time (usually 12 or 18 months). This will give you some breathing room if you are having problems meeting your financial commitments in the coming weeks.
Again, people with higher credit rating will qualify for better offers, so if you have a low rating, use cards that you already have before you apply for a new card.
5. Send letters of temporary difficulties
If you have any problems with the payment of the mortgage, your first step should be to find a lawyer. Then you should write a letter of temporary difficulties lenders, such as your mortgage company to see what you have options.
6. Use of public assistance programs
Currently the government is working on implementing policies to assist Americans experiencing a shortage of funds during the crisis. But there are many other resources offered by communities and local authorities across the country.
7. Attract pension savings
You can also use their retirement savings, although the financial consultants say that this should be a last resort. If you have a Roth IRA, you can withdraw your contributions without taxes and without penalties (but not at the expense of investment growth).
If you нетRoth IRA, you can take a loan from your 401k. This way you will avoid penalties, but you will have to repay them within five years.
This path is fraught with many drawbacks: you will lose any potential investment growth during the term of the loan, and if you are not able to repay the loan within five years, you will have to pay taxes and other fines. If you retire before the repayment, you will have to repay the entire loan within a few months, to avoid fines.
8. Avoid instant loans
If possible, avoid instant loans, also called cash advances. These loans are easy to get and they can be useful in times of extreme financial pressure, but they are incredibly expensive. According to the Bureau of financial consumer protection, the average APR on the loan until payday is nearly 400%. Even a credit card with a high interest rate has a much lower APR.
They can also catch the creditors in the debt trap. They are designed to payout a lump sum, usually within two to four weeks after taking the loan. After that you will be charged penalties and fees if you fail to repay them. You’d better to accumulate credit card debt than to use these loans.