If your income has been negatively impacted by COVID-19 or you are at risk of a pay cut or layoff, it’s time to revise your debt repayment plan—as now is not the time to pay off debt. Here are a few tips that can be further optimized by working with your financial advisor.
Pay Your Monthly Minimums
You may have been working hard to pay more on your monthly payments, but now is the time to pay your monthly minimums. Even if you have enough to pay more you should only pay more if you have at least a 6 month financial cushion. If you have less than a 6 month cushion pay the minimum and save your cash.
Use Credit Cards Wisely
Ideally, credit cards should be reserved for emergency purposes, and a global pandemic fits the bill. If you need to rely on credit cards for food, bills, or cash, be wise as you will need to pay off the debt you create at some point down the road. Be really mindful of every dollar you spend and only spend on essential expenses.
Take Advantage Of Relief Solutions
Make sure you are fully informed regarding the relief solutions available to you. Student loan payments have been deferred for 6 months and will not accrue new interest. Unemployment benefit requirements have been expanded and weekly payments have been increased for the next several months. Qualified businesses have been offered payroll loans, that don’t have to be paid back if you meet the guidelines related to retaining your staff. Many communities have expanded their food pantry and meal services and there are more relief solutions and more on the way.
Even once COVID-19 has passed your new normal may be drastically different so prepare yourself now.