In the United States, and all around the world the human race is dealing with the largest pandemic in the last 100 years.  It’s scary due to the potential health consequences, but also because of the financial consequences.  Governments everywhere have spent the last 6+ months asking or ordering their countries’ citizens to close businesses, stop working, and stay at home.

If you have experienced a significant decrease in or elimination of your employment and are freaking out about how or if you can pay the bills (especially if you’re in the US and lost your unemployment boost a month ago), I’d like to offer some tips. 

Instead of packing your closets full of toilet paper and pasta to feel like you have a little control over the situation, try facing your finances head-on and working through some of my suggestions.  Burying your head in the sand and ignoring the problem won’t, ultimately, make things any easier.

And, if you’re reading this post long after the COVID-19 crisis has subsided, these tips can be used in any time of financial crisis.

What do you have, and what do you owe?

The place to start is taking an inventory.  Make a list of all the money you have access to.  This includes your checking account, savings accounts, cash under the mattress, and the coin jar for Disney.  Don’t include your investments or money you could borrow, such as credit cards.  If things get really bad, you can consider the investments later, but going into debt – or further into debt – won’t make things any easier later.

Next, determine what expenses you typically have to pay for.  List them all.  Include the mortgage/rent, utilities, groceries, kids’ soccer balls, Netflix, etc.  After, you’ll sort them in order of importance so it might be helpful to put them on little squares of paper or sticky notes.  Do your best to estimate how much each expense will be for a week and a month. 

List your expenses in order of importance

Now’s the time to sort your expenses in order of importance.  I agree with Dave Ramsey who says you should take care of your four walls first: (1) food (2) shelter (3) utilities (4) transportation.  After those four are put at the top, sort the rest of your list in order of importance.  If you’re having trouble,  just look at one at a time.  For example, let’s pretend this is what you have so far and you’re trying to figure out where your child’s sports fees fit in:

1. Groceries

2. Rent

3. Electric

4. Gas

5. Student loan

6. Internet

Ask yourself if the sports fees are more important than your student loan payment.  If the answer is yes then you’ll put it between gas and student loan.  If the answer is no then move on to the next one and ask if the sports fees are more important than the internet.  If the answer is yes then you’ll put it between student loan and internet.  If the answer is no then you’ll put it at the end.  You can repeat this question and answer process for each item on your expenses list. (This is why having separate squares of paper or sticky notes is helpful so you can easily reorder the list.)

Figure out how far down the list you can get

Use the amount of money you “found” when you searched around for spare change and run down the list to see how far you can get.  When the money runs out, you either have to not pay the rest of the list or find some more money.  We’ll cover that in a moment.

See if you can reduce the expenses

There’s a three-prong approach you should use here. 

First, see if there is anything you can cut out completely.  You may have to ask yourself the tough questions here.  Can you cut Netflix cable?  Can your kids take a season off from league sports?  Do you really need three cars or can you make it with two (or one!)?

Second, see if you can reduce the expenses you can’t cut.  Call around to different insurance carriers to see if you can reduce your home and auto insurance.  Contact your credit card companies and ask if they’ll reduce your interest rates.  Call your internet provider (or their competition - if there is any) to ask about a rate reduction or a cheaper plan. Same for cell phone service.

Third, inquire about temporary deferment of payments or payment plans.  Will any of your lenders let you skip a payment?  Can you set up a payment plan for your utilities or spread them evenly over the year?

(NOTE: You’ll want to be careful about this one. It’s one thing to skip a payment if they are going to move it to the end of a loan, but you could get into trouble if the lender will require all deferred payments be made in a lump sum at the end of the deferred period. For instance, your mortgage company might let you defer your $1200 mortgage payment for 90 days but at the end of that period require that you produce the entire $3600. If you’re still struggling in 90 days then you might not be able to make that payment.)

Make some [more] money

I bet you have some things around your house that you don’t need, at least not now. Selling unwanted or unused items is a way you can get an influx of cash, quickly. In times of crisis you might need to consider selling things that you know you’ll want to have/use again someday but that are not necessary to survive. Consider a patio set, for example. You might sit outside often and really enjoy it. It’s not, however, necessary. Selling that patio set might mean being able to pay the electric bill for another month. When your financial situation improves you can look for a nice used set to replace the one you had to sell, and possibly help out someone who is then going through what you’re going through now.

Take an inventory of your skills and experience, brush up your resume and start applying for any position you can find. Think outside the box and consider work at places such as a grocery store. That might provide not only some extra income but also a discount on groceries to lower your expenses. While it’s true that many businesses have cut back or closed completely, there are also lots of places that are thriving and hiring.

Investigate support programs

Last, but not least, look into what government and community support programs are available. Here’s a list of some possibilities to explore:

• Financial assistance for food (aka “food stamps”)

• Free or reduced healthcare

• Food banks

• Utility assistance programs

• Government-provided phones

• Childcare assistance programs

• Full or partial unemployment

This isn’t an exhaustive list, but it’s a good place to start.

Times might be tough, but there are steps you can take now to improve the situation. There are things you can control and ways that you can move to a more stable financial position. Try the steps I’ve suggested here and you might find that knowing what you have and what you’re spending, and taking concrete action to improve things, will make you feel like you’re in control and not just a victim to the crisis.