The world is currently at a standstill, and suddenly millions of Americans are at a loss – financial and otherwise. Vacations, new homes, latest cars, job promotions and hearty life savings, which once seemed the pinnacle of financial accomplishment, now seems untouchable. The news reminds us daily of the growing number of unemployment; 26 million to date and still rising. All of the uncertainty can create disarray and confusion on how to proceed through this financial collapse, yet it is inherent that we must. While the local, state and nationwide economic aids are mobilizing to help US citizens persist, fears of a failing economy can seem overwhelming. Remember; future thinkers win during pandemics.
People are certainly waking to a new normal that involves staying home or limiting their jaunts through town and beyond. This time creates space for us to genuinely consider our financial situations and job security at depth. Some have saved money by being home and cooking each meal, and others sadly, have lost. Zoom has provided job opportunities for those working at home, but a large population has not fared as well and the disparity is blatant. The beginning of financial inquiry needs to start with finding out how much money we actually currently have. Another question is how much money could we have? Finally, how much money will we likely need for this period of uncertainty? This “money” we have could be in form of cash, or assets. According to a recent article by USA Today, “Many families have two, three, four cars.” Now, more than ever, a minimalist mindset might serve us well and create cash flow for unforeseen needs. Could some cars be sold? Refinancing your home, while it involves several lengthy steps and fees, could be another path towards securing cash.
There are several traps that will try and engulf people during this difficult time. First of all, panic may set in and quick cash will sound appealing. It is highly advised to avoid this rapid money route. One way people are caught is to receive short-term cash advances through payday loans involving sky-high interest rates; almost 400% APR! This action will likely be regretted as paying it back will create a hole that is difficult to refill. Another popular, yet dangerous way to pay for groceries, clothes, shoes, household needs, car work, gas and other needed items, is with a credit card. These “opportunities” are nothing new, as credit card companies have preyed on vulnerable parties for years. I remember being 20 – it was 1994 and I thought I was so important for having received applications for cards from every department store in the mall. I quickly found out that it was not a stepping-stone to success, but destruction. While swiping can seem harmless enough, difficult times create greater credit spenders and then – enters regret. Don’t do it! Credit card cash advances are welcomed at the time of purchase, but fees can range from 3% to 5% per transaction fee and the interest accrues immediately. That bag of groceries you buy will cost you much more once you throw in the hidden fees. Interest roars its ugly head again on this one and rarely leaves the credit card holder void of injury.
Retirement assets are another place where people go to look for money. One appealing incentive stated in the USA today is that consumers younger than 59 ½ who have been affected by the Covid-19 crisis can withdraw up to $100,000 of their retirement savings without incurring the usual 10% penalty. While this option may be a means to an end, if other measures are available, it is best to leave this money in the bank to grow interest over time. Thinking of the future gains will aid in the long run.
Elected officials remind constituents not to panic because Congress is working on a bail out package covering its citizen’s essentials. The Coronavirus stimulus aid provides a $1200 check for individuals; married couples receive one for $2,400, and each child under 17, $500. Families eagerly await this much-needed assistance as needs continue to grow.
Personal loans may also be attractive to handle important day-to-day financial situations that must be addressed during this time. Some banks, such as Marcus by Goldman Sachs and PNC, currently offer interest rates range anywhere from 5% to 30% APRs, with lower rates offered to consumers with higher credit scores. Finding out your credit score before applying for a loan will help you know what chance you have of this course of action.
Credit unions also offer loans at reasonable rates. Oftentimes these establishments carry interest rates that are lower than those offered by larger banks and give precedent to service workers such as teachers. The Teacher Credit Unions promote savings to their clients while providing loans. Other credit unions are offering APRs with 0% interest for an initial repayment period, such as the Northern Credit Union in New York.
While there are many ways to find cash in these uncertain times, may your future be in view and your decisions in line with your hopes and dreams when making your choices. William A. Ward said, “Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.” Money is something that must be used wisely, and in doing so, can meet our needs and also be given to help someone else. In these times of insecurity, advice, thought and future thinking will benefit us the most in our monetary choices and will ultimately help rebuild a nation.