The Complete Guide to Prioritizing Bills During a Financial Crunch
If you are one of the millions of Americans on furlough thanks to the coronavirus, you may be scrambling to cover your bills. Let’s take a look at what financial experts are advising so you can make an informed decision about your finances going forward.
Triage Your Bills
Financial expert Clark Howard recommends putting your most basic needs, including food and shelter, before any other bills now. Make sure you can feed your family before using your limited resources for loan payments or credit card bills. Similarly, your family needs a place to live, so mortgage or rent payments should be next on your list.
On March 18, the U.S. Government announced that they are instructing the Department of Housing and Urban Development (HUD) to immediately halt “all foreclosures and evictions” for 60 days. As options for owners develop, speak to your lender before making any decisions. If you’re a renter, be open with your landlord. They may be willing to work with you.
Paying for Transportation
Missing an auto loan payment can mean risking repossession of your vehicle or damaging your credit score. This should put car payments next on your list of financial priorities. If meeting that monthly payment is impossible right now, it’s best to communicate with your lender and come up with a plan that is mutually agreeable to both parties.
Utility and service bills should be paid on time each month, but for workers on furlough due to the coronavirus pandemic, these expenses may not even make it to their list of priorities.
Most states, including California, have outlawed utility shutoffs for now. Many providers are also willing to work with their clients. Visit the websites of your providers or reach out to them by phone to see what kind of relief and financial considerations they’re offering consumers.
Unsecured debt includes credit cards, personal loans, and any other loan that is not tied to a large asset. Clark urges financially struggling Americans to place these loans at the bottom of their list of financial priorities for now. At the same time, he reminds borrowers that missing out on a monthly loan payment can have a long-term negative impact on a credit score.
Here, too, consumers are advised to communicate with their lenders about their current financial realities. Credit card companies and lenders are often willing to extend payment deadlines, waive a late fee, or occasionally allow consumers to skip a payment without penalty.
Bay Federal has options to assist our members during this challenging time. If you have a loan or credit card with Bay Federal, please visit our website for a list of programs available to help our members through this time of financial hardship.