Start Where You Are Then Find Your Way

Gwen Garrison |

The rapidly changing, and yes—unprecedented—situation caused by the pandemic has up-ended much of our lives.

Recently, we wrote to you about the need to assess your financial situation and 3 important words:  Awareness, Acceptance and Action.  You must take the time to do this, because only YOU can take care of YOU!

Today let’s focus on Awareness.  If this is so scary that you can’t face it alone, that’s OK.  (Sibyl and I have had clients come to us in that state before the pandemic!)  A close friend or family member may be able to talk with you and provide support to gather the information you need.  Perhaps you can offer support to them, as well.  Nonetheless, make an appointment with yourself to begin, as it is the most important step you can take right now—even though things will certainly keep changing.  Once you have a picture of where you are, you can more easily understand how changes impact you.

Be sure to consider this recent information as part of your toolkit to navigate these tight times:

By now, many of you who are eligible for federal, state, or other economic relief have heard whether your applications have been approved and if you have grants or loans on the way.  Be sure that you understand the terms of this aid, particularly what payments are necessary in the next 6 months, what portion of the loan may be forgiven and under what conditions.

You have options to defer payments on various debts, from credit cards to mortgages, and even rent, in some states.  Check with your lender or credit card company for details.  Be sure to ask whether lenders are 1) pausing all debt payment without interest accrual 2) accruing interest on the current debt during the deferral 3) requiring a “balloon” repayment of deferred amounts at the end of the period 4) renegotiating the terms of the debt to spread out the deferred amount after repayment begins 5) or adding the deferred amount and renegotiating the loan or debt entirely.

The IRS has extended deadlines for filing your 2019 taxes and extended the time to max out your 2019 IRA contributions.  Check this link for details.  Also, ask your tax advisor about deferring your estimated tax payments and Required Minimum Distributions for those of you who are seniors.

The IRS has created a hardship withdrawal allowance (related to the virus) of $100,000 from retirement funds, with no penalty and no taxes due.  You may repay the amount as a tax-free loan over a 3-year period.  If you can't repay the loan in 3 years, the taxes due may be repaid over an additional 3-year period.

If you are unemployed due to COVID-19, this "lack of work" situation adds $600 per week to the state unemployment benefits for which you are eligible.  Most Americans will also receive a stimulus check from the federal government, and further assistance is under consideration.

Another option is to reduce the cost of your debts.  If you are still employed and plan to remain in your home for the foreseeable future, this may be an excellent time to refinance a home (interest rates are extremely low).  Inventory your credit cards and write down the interest rates, monthly payments due and the balance on each card.  Check out Wisebread.com to find credit cards offering balance transfers and 0% interest for 12-21 months, depending on the card and your credit rating.

If you are unemployed, you certainly are not alone.  Perhaps never before have so many Americans who want to work been unemployed.  You may be unable to see your return to "normal" right now.  Many of us cannot -- there are too many unknowns.  But we will all move forward the best we can, and we must have patience and a bit of faith about that.

As you assess your income and expenses, consider a range of best-to worst-case scenarios.  How long will your funds last?  Can you reduce or delay your expenses without adverse effects on your credit or your ability to repay?  What options do you have for work or additional income from all those in your household?  As states begin to re-open, child care and public schools are being discussed as essential prerequisites.  Listen carefully to understand your state's plans and public health advisories to assess the options for your household's income-producers to return to work safely.

If your assessment turns up needs for additional education, here are 5 places to get free online learning in a variety of fields.

  • Coursera offers a list of free online courses that you can finish in 8 hours.
  • Lynda.com has one month free available for all of their online courses.
  • Edx.org is partnered with several universities to provide free access to online courses covering a wide range of topics.
  • Massachusetts Institute of Technology is also offering free courses in a variety of different subjects.
  • Harvard University has a catalog of courses they have made free and available.

If you need more options, search "free online learning."

Sibyl and I have transitioned through some daunting life changes, and we understand what it takes.  We're glad to talk with you.  Call for an appointment today, or go to www.lifeplanfinancialadvisors.com to schedule time to talk about your concerns and your future.  Please feel freel to share this information with friends or colleagues.  We're happy to talk with them as well.