How Detroit Residents Should Handle Their Finances During the Coronavirus Pandemic
With the recent change in the environment and the spread of the novel coronavirus, times are uncertain and the economy is being challenged. Novel cases in Michigan have reached over 1000, with over 300 of those cases in Detroit. This rising number is causing emergency and precautionary measures to be taken to prevent the spread of the virus. Such measures have included self-quarantining and the closures of schools and businesses, leaving only essential businesses open. This has caused small businesses to take a hit financially and has also caused layoffs people weren’t expecting.
We are in the midst of a battle, with an unclear end in sight. You might be wondering about your own finances and how they might be affected. Now is the time to start preserving what money you do have and thinking about what you can do to make the best of this time. Below are some suggestions and tips on how to manage your finances during this time.
Evaluate Your Mindset
Times like this can feel daunting, but take a moment to pause and evaluate your mindset. Regardless of the situation, managing finances always starts with your outlook. What do you need? What do you want? What is financially reasonable? Do you need to work more hours? Apply for a new job? Those are basic questions to ask when the economy and environment are going well. When things plummet, it is easy to get caught up in the despair.
The media is always producing information of some kind and as humans, we often act by example. Be sure to gather and purchase items you need, but be careful not to panic buy. Pause to think about what you really need and how much of an item is reasonable to purchase. If you don’t, you may end up overspending money, which can hurt you in the long run.
Loans and Lending Money
If you have been laid off from work, it will be difficult to continue making payments on a loan. Contact your lenders as soon as possible to see what options are available. Lenders are aware of the current environmental situation so there may be options to extend payments without interest. Make sure to communicate with them and let them know your financial capabilities at this time.
Like the loans, if you find you are unable to make a mortgage payment, contact your mortgage lender. They may be willing to flex the payments and reduce the amount you owe. You may be able to suspend or reduce the payments for up to 12 months if you are affected by the virus so check out any available options. If you are able to get relief during this time, you will be able to work out a permanent plan for when you are back at work. It is better to be upfront and honest about your situation. Talk with the lenders before payment is due. They will likely be more willing to work with you rather than if you wait and start missing payments. Be proactive rather than reactive.
Small Business? Reverse Consolidation
If you own a small business, you know start-up can be a struggle and times like now can be brutal on your income. If you applied for merchant cash advances (MCAs), you may have an option to consolidate them to help you with your payments. An MCA is useful to small businesses starting out because they can help fund new projects, pay employees, and accumulate the necessary inventory and equipment to get the business on its feet. They work by initially funding the business and are paid back by future earnings or on a short term loan plan with low monthly payments. If you have several MCAs, look into reverse consolidation. Reverse consolidation is comparable to restructuring a loan. This is a way to keep working on the debt, while still managing to run your business. This gathers all the MCAs into one single limited payment and saves business owners up to 50% of monthly advanced payments.
America runs on workers fueling the economy. The plastics manufacturing industry alone employs nearly one million workers, but nobody is safe at this time. Even though plastics are still needed, companies will cut costs where they can. If you are laid off, check to see if you qualify for any sort of benefits. In typical work life, if you are injured on the job, you often have the option to apply for temporary benefits. If you are granted Temporary Disability Benefits, you will receive 2/3 of your average weekly earnings. With time such as now, there may be options either with your job or the government for temporary benefits to help you get by.
The goal is to always be building your savings account. You never know when you might need it and even if you have to dip into that account now, already be thinking about how you will replenish it. Any small amount helps. Any type of gift money you receive or kind gesture from a neighbor should be added to the account. If your budget normally and find yourself spending less than planned, but the difference in your account. Have a part of your paycheck that is dedicated to the savings account. Make that check direct deposit if it helps not actually seeing the money come to you. Now is the time to really pinch pennies and the results will add up.
Don’t Panic, Focus, and Manage Your Finances
As the people work to defeat the virus, be sure to take care of yourself and consider the best way to manage your finances. First, take a moment if you feel overwhelmed and pause to evaluate your personal situation. Resist the urge to panic buy. When you have a moment, consider what loans you have and if you might have options to make payments easier. If you have a mortgage, there might be similar options. Small businesses can evaluate their MCAs and lastly, save money where you can. Use the savings if you need to, but simultaneously work to restore those accounts.