It seems like our uncertain times are here to stay. Our country has been through several life-altering events in 2020. Our Gross Domestic Product – the United States’ economic growth indicator – was expected to drop to thirty to forty percent in the second quarter alone. Millions of citizens are without jobs. However, there are many opportunities to financially survive these difficult months.
The Emergency Savings (ES) is Back
One of my favorite tools is the emergency savings (ES). Every family should consider having one. It can be an actual savings account at your local financial institution (FI) or just a line item on your monthly budget. Put away at least ten percent of your monthly income. The ES can be useful for paying those unexpected expenses – blown tires, clogged tub drains, or a new refrigerator. I have experienced all of these issues over the past several years and can attest to the value of having the cushion of an ES. Also – and this is important – save at least three to six months’ worth of living expenses. You may move, change employment, or lose a job. Remember that stimulus check that you received? If you didn’t spend it, put it in the ES!
The Importance of Cash Right Now
Cash! Have it readily available. During this pandemic, we don’t know if the markets will crash, affecting the economy and our bottom lines. Minimize your expenses and save more, putting any extra money in your ES. Remember there will be hits to our wallets – taxes, medical expenses, and car repairs – but you can utilize your credit cards and earn some rewards. Make sure you have the ability to pay off the cards and do not incur too much debt, driving down your credit score. You will pay it off over time.
Refinance Your Home
Look into refinancing your home regardless of where you live. Many institutions are dropping their interest rates right now. In fact, I recently received a great interest rate from my local credit union on my new mortgage. I consolidated our timeshare and first and second mortgages from another FI, saving over $300 a month! My loan payment was also pushed off at least one month. I was able to put the extra cash into my ES. Try to be patient during this process. Due to the onslaught of mortgage applications, loan fundings can take up to sixty plus days to close. It is not your lender’s fault!
What is Required This Year
I know that these tips are quite unusual and unorthodox. However, these uncertain times are requiring some “out of the box ideas” to get us through the coming months of big bumps, while maintaining our financial health. We have made it through more than half of the year. Continue to be creative with your money, planning to protect your family, building your savings, while boosting your credit score.
Personal Finance Coaching
If you need some personal finance coaching, check out on the internet www.fheducators.com.