With stay-at-home orders extend to at least May 15 across L.A. County, the COVID-19 outbreak has raised troubling economic questions for residents.
There’s reason for concern, according to local financial experts, but there are also options and steps you can take to cope and survive.
“There’s a myriad of questions and concerns and reasons to be anxious,” said Erick Arndt, a financial adviser at Virtue Wealth, who added that from his 17 years in business, “this is the most anxious I’ve ever seen people.”
Over the past three weeks, with stay-at-home orders and other restrictions strengthened in an effort to help prevent the spread of COVID-19, more than 15 million people were laid off and about 6.6. million had filed for unemployment benefits by the start of April, according to the Labor Department.
Already, many Americans are expecting to receive federal stimulus checks of up to $1,200 each that could provide some financial aid, after President Donald Trump approved a $2 trillion relief package in late March.
Other financial relief from both local and federal governments are in the works for individuals and small businesses but receiving it could take some time, including at least a few more weeks to receive the stimulus checks.
Until then, financial experts said there are several steps one can take to help prepare and cope during these times:
Do the prep work
Regardless of your situation or whether you’re currently employed, it’s important to have a plan that reprioritizes spending, especially in case of an emergency.
One way to start is by looking at your budget and seeing where you can start cutting expenses, said Arndt.
“Reprioritizing what you can and shouldn’t be spending is vital at this time,” he said. “You want to make sure you have food for you and your family, that utilities stay on, that you can pay for your home or rent and have money for transportation.”
It often helps to see it all laid out in front of you — the bigger picture. Start with a budget worksheet, whether a weekly or monthly option, and start listing your costs. Listing and categorizing can help identify needs and where you can trim.
“Everyone budgets and plans a little differently, but worksheets can be helpful because they can help guide you through the process, prompting you to answer questions about your spending or reminding you of things you might overlook when making a budget,” said Greg Mahnken, a credit industry analyst with Credit Card Insider.
Lost your job? Try these options
From the get-go, if you lose your job, the ideal situation is to have three months’ worth of savings that you can count on, said Arndt.
“Let’s say you spend $4,000 a month, you should have $12,000 in savings in your bank account. You should be using your savings to live modestly, which is your home, your car, basic food. You don’t need to buy new clothes right now, you don’t need to buy a new stereo. Make that money last as long as you can.”
Not everyone has savings, however. But there are sources you can already take advantage of, ranging from applying for unemployment benefits to calling your creditors.
For those who will file for unemployment, it’s best to do so within the first week of losing your job or having your hours reduced, according to the California Employment Development Department.
With high volumes of people applying, it’s important to file earlier rather than later, as the process could take weeks to receive funds.
“Unemployment applications are at record numbers, including many who have never had to apply before,” said Mahnken. “States have more flexibility to ensure those who are unemployed due to coronavirus can get the help they need to provide for their families.”
While you wait for a response, call your lenders, utility companies and landlords if you’re worried about missing payment on bills. Credit card issuers, for example, are offering to waive late fees and defer payments. To contact them, call the number on the back of your card or check Credit Card Insider’s list of issuers at creditcardinsider.com.
The bottom line, said Mahnken, is to “do what you can to defer or reduce your bills so you can free up cash to provide for your family and stay in your home. If you have an emergency fund, this is the exact situation it’s meant to be used for — a temporary loss of income.”
Your 401K and other long term investments should be Plan Z
If you have savings, try to make them last as long as possible because “you don’t know how long it’s going to take to get a job,” said Arndt.
Transferring money from your 401K might could be an easy solution but that should be the last place to turn to for short-term costs, he added.
“Your last resort is your 401K or IRA,” said Arndt. “You should not be tapping that unless you are facing a foreclosure or bankruptcy.”
While these are stressful times, advisers remind this will pass and preparation is key to helping stay afloat.