Money may bring a ton of happiness, but often, it manages to spike our stress levels. With a raging pandemic, highly volatile stock market, and an ever-growing unemployment rate, anxiety levels of many people are through the roof.
During these unprecedented times, it is vital to remain calm. Decisions made in haste have never proved well for anyone. The last thing you want to do is make a financial error that adds to the anxiety, especially when a lot of things are out of your control. Instead, focus on what can be done.
We have rounded up some expert tips on managing your finances in these difficult times.
Avoid Excessively Tracking Your Investments
austindistel/Unsplash: Don’t fret constantly about your financial health
While many people perceive the current circumstance as the worst possible scenario, smart people will turn this into an opportunity to make profits.
Since the stock market is unpredictable than ever, there is a good chance that your 401(k) would have taken a hit. This is the right time to invest more money at a lower rate. Do not panic and sell the investments as a measure to cut your losses.
Experts have advised riding this wave out because markets will bounce back once the pandemic is under control.
Savings like these are meant for a long-term horizon. Do not give in to the temptation of cashing in on companies that are hot right now, as nobody knows how the current scenario will play out.
It’s Time to Pay Attention to Your Emergency Fund
alexandermils/Unsplash: Keep an emergency funds available for any time
Having an extra cushion to fall back on, goes a long way in managing emergencies or a situation when there is a cash crunch. If you already have a backup fund, then you are in a good place. In these times, those who have a job should look towards building their own savings.
Our tip is to make the minimum payments instead of trying to get ahead by paying earlier than usual. Save the extra cash and invest it in retirement funds to take benefit of any employer matching programs.
Also, start generating a second source of income and cutting excesses from your life by selling the stuff you do not need.
Continue to Pay the Bare Minimum Amount
If a loan or credit card debt is outstanding, try to pay the monthly installments before the due date, as defaulting will harm credit scores. If there is no way for you to make the payments, have a talk with your lender.
Most are rational and ready to make rearrangements so that they can recover their money.
For student loans, the federal government has allowed deferring the payments till September 30. Keep in mind that, even though this window offers a breather, the liability or interest costs will not go away. Also, the postponement is exclusively applicable to federal loans.
You can visit this site with a list of banks that are willing to help out with credit card loans, car loans, and mortgage payments.
Trim Excess Expenditure
The one good thing that has come out of the lockdown is that cash outflow has drastically reduced. Going from frivolous spending to buying only the necessities, our current situation has allowed us to assess what our expenses are like and where we can make cuts.
Since you are spending a lot of time at home, start budgeting. Cut that streaming service’s membership, which is not in use, call up your cellular company and ask them to downgrade the plan, or get creative in finding ways that can help in saving more money.
Refinancing of Debt
Get your banker to refinance your debt costs
To facilitate suffering citizens, the Federal Reserve Bank has dropped interest rates to 0%. It means that loans are cheaper, and even without a good credit score, you could snag a more affordable loan that offers a longer repayment term.
If the debt has a flexible rate option, then there is a possibility that the interest rate may be slashed. Call your banker and renegotiate financing costs; there is a chance of getting a lucrative option based on your credit history. Also, before considering refinancing, it is best to consult a professional as the process is complicated.
Make a plan of things that are in your control with a focused and calm mind; it helps provide a structure to day-to-day matters. It can also be a good distraction if you are getting worked up with other mundane tasks.