AARP Expert Martin BookerAARP Expert Martin BookerShould you accelerate debt payoff?

During the uncertainty of COVID-19, many people are concerned about their finances or continuing to pay off their current debt. One thing to consider when it comes to debt during these uncertain times is should you accelerate debt payoff. Right now, there is uncertainty about the future of jobs and companies across America.

 

As you consider how to manage your money right now, one important thing to prioritize is liquid savings. If you have not saved an emergency fund (3 months of your expenses if you’re in a double income household or 6 months of your expenses if you’re in a single income household), then you may want to take measures to increase your savings now. Here are some ways to do so:

 

  • Reach out to your financial planner to discuss where you can make changes to increase your liquid savings
  • Contact your mortgage lender or leasing office to discuss options for payment deferral
  • Take advantage of the Student loan payment deferral
  • Pay only the minimum balances on debt and move excess money to savings
  • Reach out to companies where you make payments and ask about COVID-19 relief
  • Save money from expenses that have been lowered such as transportation cost

 

When asking for a deferral or deciding to defer in order to save money, be sure to understand the terms of your deferral before you make a decision. Ask the following questions when contacting a representative:

 

  • When will payments begin again?
  • What are my options for payback after the deferment?
  • Will you report missed payments to the credit bureau during this deferral?
  • What will happen to any interest that I owe during a payment deferral?

Be as informed as possible so that you in a better situation after we make it through these uncertain times. For more information on managing your budget and debt, check out this recent expert series.

 

Comments

I agree. 

 

My situation as a retired person is different from the typical situation of a working person. I have no debt and I have sufficient liquid savings.

 

But I have suggested to several close family that for the foreseeable future it would be wise, in my opinion, to have very healthy liquid savings available. There is much uncertainty ahead of us with the Corona virus and its effects on our economy, peoples jobs, and people's lives.

 

Retaining available cash for liquid savings at this time seems like a small price to pay as insurance rather than putting that to cash into debt payments, student loan payments, and even investing for retirement.

 

 

 

I tried a place to help with debt. I used to work at credit bureau.  They say they can do so much better. They sure did by taking 2 hundred dollars of my account!!!!!

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