Top 5 COVID-19 Money Questions

If you are like me finances have been on your mind more and more in the past weeks.  Reading articles and asking questions about what to do next with the economy, stay at home orders, and every day routines in flux.  Covid-19 money questions are on everyone’s mind and I’m here to help.

Coronavirus or Covid-19 money questions come up and often you can’t just click a button or ask Google or Amazon the answer.  Although I’m sure it’s coming soon.  Today let’s dive into some really great questions and then have some really quite good answers from me.  

Here are five of the top five (5) money questions that have been asked during this time of social distancing.  Assist to my friends for the questions over at the Financial Gym.

Should I be investing right now while the stock market is down?

Let me first start out by saying everyone’s situation is different.  I’m a big believer in personal finance is PERSONAL. 

OK now that my disclaimer is out of the way.  My short answer is Yes.  However I do have some prerequisite type college course requirements before investing.

Let’s check off these boxes before investing in the stock market:

🗳High interest debt is paid off, example credit cards

🗳Emergency fund which allows you to sleep at night, example 3 months of expenses or more in a high interest online savings account like Ally Bank (my current favorite)

If you have these boxes checked off you get to ask yourself the big question.  Should I invest or pay off debt?

Personal finance questions are tough, am I right.  Here’s what I recommend to my coaching clients and in my top secret newsletter to my email subscribers.  Choose the answer that motivates YOU the most.  If paying off your student loans fast with Usain Bolt quickness puts a smile on your face like this video did for me, then Just Do It.  That’s your answer.

Here’s the other thing FOCUS on paying off your debt or investing.  Don’t do both. 

Have you ever wondered why Lebron James doesn’t play football despite being one of the most gifted athletes in the world? 

He knew that if he put all his focus in basketball he could be the best.  Focus on one thing.

My federal student loans are in deferment until September. Should I keep making payments?

I’m all about short answers today and the answer is No.  Let me explain why.  

This is the perfect time to build a better emergency fund as the uncertainty of the economy, jobs, stay at home orders, and a long list of other unknowns are upon us.

Take the next five (5) months and build your emergency fund.  Then each month take the exact amount of each payment and set up an automatic transfer to your savings.  Done.

I shared with you the Why, now let’s look at two (2) scenarios that could lie ahead.

Let’s imagine for a second that your federal student loan payment is due again in October and the world has rebounded rather nicely.  We are all enjoying our jobs, moving freely around the globe, and uncertainty has gone away.  Great right, that just means you didn’t need your emergency fund.  Feels pretty good in this scenario.

Now imagine the opposite for a second.  Your payment comes due again in October and the world hasn’t rebounded very nicely.  Instead your hours or salary were cut back dramatically, Americans are cautiously traveling as uncertainty is  still lingering.  Great job, this means that you created a financial cushion and are better prepared for uncertainty.  This feels even better than the first scenario.

Let’s hold off on those federal student loan payments.

I am unemployed due to COVID-19. How should I navigate unemployment?

Probably the toughest question of the bunch.   No Covid-19 money questions are easy to answer.

I’ve been in a similar position in early 2009-2010 during the Great Recession.  Based on this experience here’s what I would do today.

First is I wouldn’t let my pride get in the way. 

  • I would apply for unemployment in my state.  Then I would research and apply to whatever government and non-government programs are available.  There are a lot of people looking to help those in need during these tough and uncertain times.
  • After that I would do a general assessment of my finances.  This would include finding out what my expenses are.  I would immediately cut out or cancel anything that I would deem unnecessary. 
  • I would focus on creating a bare bones budget.  Start with housing, food, lights, and water.  From there I would create a financial picture of what lies ahead. 

Start with the question how long will my money last if I don’t have any income.  Each situation will vary, but it’s important to know and understand how long you can keep your head above water.

  • After that I would reach out to family, friends, and acquaintances especially on Linkedin looking for employment in your line of work or job that you would consider doing. 

For example if a bookkeeper at a small business would you also consider a cashier at a grocery store.  Remember my first statement, don’t let pride get in the way of earning an income during tough times.

My Story about Unemployment

Personally in 2010 I hit a breaking point that my current income from part-time work and side hustles wasn’t going to cut it any more. 

I was at the point that my money wasn’t going to cover my bills next month.  I set my pride aside and went back to the same job I worked at during college.  It was temporary and a couple months later I was fully employed again.  I hope that helps.

How should I begin saving money?4 Steps to a Better Budget

It all starts with knowing what you are spending by tracking your expenses

[tweetshareinline tweet=”You have to know where you are today before you begin your journey tomorrow.” username=”EvenStevenMoney”]

I like to keep things really simple.  My next move is to make a budget, I prefer the zero sum budget.  It starts with projecting your next month’s income and spending.  Subtract each expense from your income until you get to zero. 

When you first start out you want to list “savings” as your last “expense” and subtract the remaining amount to bring your first attempt at saving to a close.  I say first because this won’t be the last time you track your expenses and it certainly won’t be the last time you add money to your savings.

As you  get more familiar with your spending you will begin to see areas that you can reduce as ways to save money.  Very similar you will earn extra money over time through raises, promotions, and maybe even a side hustle.  That’s when your saving amount begins to grow. 

If you are a little further along and wondering what amount or percentage to save each month I would like to answer with a Michael Jordan golf betting story.  Michael Jordan is a well known athlete and golf enthusiast.  He also enjoys to gamble.  

Michael Jordan is worth more than a billion dollars so he often has to adjust the amount of money he would bet with each player.  Instead of diving into their finances or asking what car they arrived in he asks the golfer the same question I would ask you for the amount of money to save each month. 

What amount makes you uncomfortable?  That’s the amount you should be saving.

[tweetshare tweet=”That’s how you should begin to save.  Start with the fundamentals, the simple method is often the best when getting started.” username=”EvenStevenMoney”]

Is now a good time to buy a home?

I would wait and build an even bigger down payment or home maintenance fund instead.  At the very least I would proceed with caution. 

It’s important to note that I don’t know what the stock market is going to do in the short term and I don’t know what the housing market is going to do either.  In fact I don’t really believe anyone does.

Here’s my thought process behind holding off in these uncertain financial times.  

  • Unemployment is at record levels of 14.7% at the time of this writing.  
  • The economy, especially small businesses are barely making it right now due to stay at home orders and the closure of an overwhelming amount of businesses.
  • Banks are tightening lending requirements currently with HELOC requirements and are already anticipating taking credit losses on current loans on their books.

With those three (3) items at the front of my thought process, I repeat proceed with caution. 

I would find it hard to imagine that after a pandemic, record unemployment, struggling economy, and financial institutions tightening lending requirements that housing prices would go up.  

Build that emergency fund, down payment size, home maintenance fund, and proceed with caution.

Ready to take your money to the next level?

Schedule a 20-30 minute phone call to see if working together is the right fit for both you and me.  I want to help everyone, but I only have time for a select few.  You’ll schedule an appointment and select Free Discovery Call

Once you schedule, you’ll get an email with some questions to fill out about your current money and finances. On the call you can ask questions about coaching and talk about how I might be able to help you with your specific situation.  No pressure to join!

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