5 Ways to Alleviate the Financial Impact of Coronavirus

The Coronavirus crisis has upended American life, and fresh ideas are needed for dealing with the problems it’s creating. At this difficult time, making a few changes at home can save you some bucks.

These are strange and uncertain times that we live in. And while we don’t completely know or understand the full impact of the virus to our health, the resultant impact of it on the economy, business and our personal finances is now becoming a cause for significant stress. Alas, here’s five ways to save some cash as you work from home or otherwise stay indoors during the COVID-19 crisis.

1. Cancel Subscriptions – yes, even THAT one.

Netflix, Hulu, Amazon Prime, Birchbox, Spotify, HBO NOW, newspapers, box of the month clubs, meal services, and more: The rise of subscription-based commerce means consumers now pay for a number of items on a recurring basis. But even a few dollars spent here and there have a way of adding up, and eating into your household’s budget. Though many gyms are putting accounts on hold and aren’t collecting fees, it doesn’t hurt to get in contact with yours to make sure you don’t get charged till you can head back in for a workout. One sports club is currently facing a lawsuit that alleges it continued to charge members even when its locations were closed.

A great way to keep track of your subscriptions is via new startup called Trim. And it does all this over text messaging! Trim is able to integrate securely with 15,000 financial institutions across the U.S. to pull in credit or debit card data, or roughly 98 percent of the market. It pulls in your data, then identifies your subscription payments by finding those that are the same amount, or nearly the same amount, and billed on a regular basis. The software is smart enough not to pick up things like Starbucks, even if you have a daily latte that always costs the same, though.

After it identifies a consumer’s subscriptions, it offers an easy way for you to unsubscribe.

2. Get Cash-Creative

Yes, cutting back on expenses is a great place to start. But, adding more money to your bottom line will not only give you the financial freedom you seek, it will also allow you the freedom to maintain your current lifestyle. All you need is an internet connection and a bit of creativity… you never know, you may even have some fun doing it!

Try your hand at a little bit of DIY: it can go a long way in saving money. From doing your own cooking (Making your own meals will save you money, especially if you decide to meal prep) to selling your old stuff online, there are actually tons of ways to use your creativity to save $$$. Check out our blog on ‘How to Make Money at Home During COVID-19’ here.

3. Change the Way you Pay Student Loans

Federal student loans come with several already-existing options. There are two ways you can temporary suspend your payments: deferment and forbearance. With deferment, you may be able to avoid interest accrual, while with forbearance you won’t, which means your debt will grow. A best practice during forbearance is to pay down the interest portion so that the debt will not grow.

However,  the Department of Education has announced that it will waive interest accrual for deferments and forbearances for the foreseeable future. This will be very helpful for those who have no other option but to suspend their payments temporarily.

There is another option though. Federal student loan borrowers can consider transitioning over to an income-driven repayment plan, which will lower the payment to a certain percentage of their income. Suspending or adjust your payments can be done by reaching out to your student loan servicer.

Private student loan borrowers do not have access to the same programs provided by the Department of Education, but can still reach out to their servicers to determine if there are any hardship programs being offered.

4. Lower/Remove Auto Payments

When an auto insurance company calculates your premium, one of the factors it considers is how much you’ll be driving the car. This is why the company may ask how long your commute is. The longer the commute, the higher the risk of the accident — and thus the higher your premium. If you’re working from home, there isn’t a commute.

Contact your insurance company or visit its website to see if you can make the adjustment yourself. How much you’ll save will depend on a variety of factors, and you’ll have to switch back once you start going into the office again.

Allstate and American Family Insurance say they’ll begin refunding premiums due to a decline in driving, according to a Monday report from CNN. The two companies say they’ll give back a total of $800 million to their customers. State Farm, Liberty Mutual, Allstate and Geico also confirmed they will start partially refund premiums.

Finally, If you think you will experience a cash crunch, you should consider removing auto debit payments for your bills and other utilities. This way you can provide yourself with more flexibility to prioritize expenditures.

5. Consolidate Your Debt

According to a recent survey from CreditCards.com, 59 percent of American credit cardholders entered the outbreak already in credit card debt. That’s equivalent to about 110 million U.S. adults. Of those who are in high-interest debt, many have carried balances for a long time, according to the survey.

There are some things you can do if you find yourself overwhelmed with multiple debts. Call the company directly and try to negotiate and see if they are offering relief. If you have multiple credit cards now may be the time to consolidate all debt on to one balance transfer card.

Consolidating into a personal loan may also be an option, especially if the rate would be lower than what you are paying on your card balances. If you take out a loan and don’t need to use your credit cards for any emergencies, it’s better to avoid using them at all. If you can help it, you don’t want to build those balances right back up again after you pay them off.

Final Thoughts

Ideally, everyone would have savings to fall back on, but even before Coronavirus found its way to our pocketbooks, only 4 in 10 Americans even had $400 in savings to fall back on in case of emergencies.

Day-to-day frugality, even in small ways, can help now more than ever. These are scary times, but you do have some control. The steps above can help to make a hard situation just a little bit better.

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