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.
