How to Financially Prepare Your Family for Tough Times
With the coronavirus and fallout from it, many families are understandably stressed out. Today we're sharing how you can financially prepare your family for tough times to survive and thrive!
While things are really fluid right now and some big decisions are still up in the air, it's important to review and if necessary reprioritize things with your finances.
Earlier this week, I sent out an email about your biggest concerns right now when it comes to money. I appreciate hearing from you.
As a personal policy, I write back as soon as I can to everyone. However, I noticed that they were certain questions and scenarios that were stressing some in the community.
Why We’re Doing This Q&A Session
I thought it would be good to create a session focused on helping families craft a financial plan for these tough times.
Andy Hill from Marriage, Kids, and Money and co-founder of Thriving Families was kind enough to join me in this chat.
You can watch it as uploaded to YouTube or catch the notes below!
Adjusting to the New Normal as a Family
Elle Martinez: I think this is our first thriving family special Q&A chat because I think you and I have been talking about doing this for two years probably.
[It makes] a lot of sense to do it right now. And with the circumstances, it's like even more of a challenge. I don't know about you, but my kids are upstairs.
Andy Hill: Absolutely. Well, I enjoyed my lunch break right outside the door here.
So if you hear a little bit of action, that's that is. That's our family tried to figure out this whole school thing. Yes.
Elle Martinez: Yes. And seeing a little technical difficulty there. But that is kind of what we're all doing right now is figuring out what the circumstances that changed so quickly.
How do we not only survive but thrive as families, which is our group name, but importantly is how do we financially prepare?
I'm not an expert in terms of how this [pandemic] is going to go, but you've probably seen they've kind of indicated that this could be a few months at the very least.
Remote Learning with Your Kids
Andy Hill: So, I mean, for us, our school system, originally it was, you know, hey, we're gonna be off for three weeks and then we got spring break coming up.
I don't know all of the news we've been hearing, whether it's our friends in California or some other folks locally here, that's at least three months, if not more. So were trying to figure out how the new normal will come.
Elle Martinez: Yes. Yes. And the important thing is like, how do you prepare? And at the same time, how do you make sure that you don't give in to a kind of fear? Because there's a lot of questions going on.
Tthere's a great opportunity for people to be extremely fearful. It makes sense. You know, this is unprecedented.
People don't know what's going on. But I think if we can stick to our values and priorities; things that we know are important to do right now.
Prioritizing Your Bills
Elle Martinez: The goal of this [chat] is to make sure how do we reprioritize, how do we reorganize it, and shift things just like we're doing right now with our home routines and our schedules.
How do we shift things with our finances to kind of ride out these tough times? So I had just recently asked within the community for Couple Money. What are your concerns?
I got one particular e-mail that I think really summed up a lot of concerns families are having, which is like how do we prioritize what bills to pay, what goals to pursue when so many things are up in the air?
So I'll just read that and maybe we can talk it out and go through the process.
This one is from Kelly:
Should I still pay my credit cards?
I work for the schools and might not have a job to return to and everything is in my name.
I live paycheck to paycheck so my buffer or savings is very small.”
This is a situation many families are dealing with where depending on the industry you're in. You don't know if your hours are going to be cut or if there's going to be enough runway to take care the essentials.
Credit Card Relief
Andy Hill: You know, let's. Let's start out the credit card side of things.
We can talk about, you know, budgeting and savings and things like that. So for the credit cards, I know you posted this in our community, I think was just yesterday about the credit card companies realizing what's coming or what's happening right now.
Yes. And getting ahead of it. So maybe you want to talk a little bit about what that is.
Elle Martinez: So I don't want to call it good news, but something as a relief. Yes, news. Something as a relief.
It seems like this time around with the crisis, people are realizing that this is going to be a long term thing. So companies, including credit card companies, are offering different kinds of hardship relief programs.
I noticed in particular, Apple Pay and Barclays, for example, are telling their customers they're being proactive in an e-mail. So check your emails that you can skip your March payment and not have any penalties for that.
That can be a solution, especially if you don't have a financial cushion.
So any kind of relief that you can get now? We'll probably talk about this a little bit more, but emphasize take advantage of it now. Use it to your family's benefit. And this is absolutely critical.
So I am happy that credit cards are stepping up. I've heard also that a lot of them are waiving fees, late fees, if you have to kind of extend payments because paycheck as you switch over.
Unfortunately, some families in our group work in the service industry and so they're going to be relying on unemployment temporarily, at least hopefully temporarily.
So until that it makes that transition take advantage of the program. Be active. Call your credit card companies and also call your financial institutions, because many of them also are offering breaks an addition to it.
Negotiate to Lower Your Interest Rate
Andy Hill: Let's say, you know, maybe they're not waiving fees or even if they are trying to figure out a way you can do this, too, is to call them.
Tell me about your situation and then talk about reducing your interest rate to begin with. You know, that could really help you, too, if you're at a higher interest rate. And this is a really hard time for you and your family.
Maybe this is an opportunity for you to decrease how much you're actually paying towards those credit card companies. To your point on other financial institutions doing this, too, I got an email from Ally today.
I'm a customer of theirs and I don't have a mortgage with them and I don't have, you know, some of their other products. But it sounds as if they're waiving some fees as well, specifically to, you know, late payments, you know, overdraft fees, things like that.
A lot of them are getting proactive. Contact your financial institutions, your credit card companies, find out what they are doing to help you during this situation so that you can still be a customer of theirs and everybody can still survive and thrive.
Relief Programs Being Offered
Check with your credit card company to see if they are offering any hardship arrangement.
Some lenders and creditors are offering to:
- Delay or skip payments on your car, personal loan, and credit card without a fee and not reported late on your credit report.
- Lower credit card APRs to reduce the minimum monthly payment.
- Modify mortgages and other loans with a temporary lower payment for a time period.
- Waive fees such as late fees or over-limit fees on credit cards and early withdrawal penalties.
- Access to emergency loans with no payments for 1-3 months
These programs are starting up now, so check in every week to see if yours has one set up.
Stash Whatever Savings You Can
Elle Martinez: Take those ‘savings’ and stash it away into that emergency fund.
So, yeah, absolutely important in terms of housing. Great point with the mortgage lenders. There is talk. I haven't seen anything official. If I see anything, I will post it in the Facebook group. But some of them are talking about maybe giving a delay, making payments for up to 90 days.
We'll see if that happens. I will definitely notify you. But I just saw that HUD, Department of Housing, if you are renting, they are not going to do any evictions. And some of them are talking about extending payments for rent and working out some kind of arrangement.
Anything you can get right now for relief, stay on top of the news and we'll do our best to, you know, keep updating on what we know. But again, it's all coming so fast that these are opportunities. But they're also a great way for you guys to find some relief right now.
Which Bills Should You Prioritize?
Yes. And Ken, let's talk about prioritizing. I know credit cards are a stress one because of the interest rate, but too, they have a tendency in the industry to kind of hound you if you're not making payments. But for families, I think going again back to this fundamentals, the first thing you have to make sure that you have the money for are the essentials, your housing, your utilities, your food and some form of transportation. Hopefully things will subside or something will happen that if you need to go to the grocery store, if you need to go to work, you have transportation. So make sure you have that. If you cannot afford that, credit cards are the least of your concerns in that scenario. You got it.
Absolutely. But we do want to tell you to never pay your credit cards again, but we ought to make sure you have some money in the bank right now. This is an emergency. This is the emergency brake for the emergency fund.
So while it's great to pay off debt and reduce your balances and things like that, take advantage of those opportunities with credit card companies to raise those fees for the time being and then focus on just shoring up some money for you and your family, because we don't know how long it's going to last and nobody can predict what's going on right now.
Yeah, and you bring up a good point. Guys, if you've listened to Andy your eye on a podcast like we are usually the ones that say pay down, that is the debt. Andy is completely debt free and we are working on paying our mortgage. That's our last debt. So when we're telling you, you know, let's put a pause on that, if you can, of course, make the minimums and take care of the essentials. Great. But your goal right now, if you don't have it already, should be focusing on that financial cushion, right?
Yeah. And now what? I mean, normally, I don't know what you say with couple money and everything like that. But the you know, I always felt really good with three months of expenses with this situation. I don't know if people want to keep beefing that up to six or nine months. I don't know what the right number is right now. It's something that people like, I guess have to ask themselves internally. But if you're in a situation where, like as Kelly saying, she feels like her job is, you know, in a tough spot. Think about how long you might be out of work before you can actually earn an income.
I don't know. That's tough to predict right now. What you want to feel more comfortable than less comfortable right now.
So, I mean, yeah, this is one of those spots where you pause on the aggressive debt payments and any of the any of the folks that are paying off their mortgage right now are working very, very low on the priority scale.
If you don't have a good emergency fund or I guess generally and other debt payments to you want to make sure that you're feeling really good with some cash right now.
Yes, definitely. And I know between my husband and I, he's the more conservative one. So in this case, I will defer to him.
Yeah, but yeah, Nicole said to me this morning, just to be clear, I don't want you to touch the emergency fund. Like, okay, I got it. I got it. Cause I'm all like stock market guy. I'm like, hey, well, this is a good time to get some, you know.
Oh, yes. Stocks right now and everything like that. And then she's like, let's just. Claire, I want to feel very comfortable with what we have in our savings account right now. Like I got.
Yeah. And that's something that as couples I mean, we both. We talk about this is having those conversations with your spouse because we tend to marry not exactly our financial opposites, but definitely we have different strengths and also different worries. So for my husband, he's kind of the same way because I'm I don't want to say like, well, maybe we should just move on. I'd like, you know. Exactly. But, yeah, I'm I'm kind of in the same boat with you. But having these conversations about that, but then also prioritizing some concerns people have is should I take money out of the stock market and maybe put that money in the savings or they're worried about that. I saw some advice from Paula Pant. It cracked me up and it was true. It was saying we are far 1 k. Treat it like the advice they're giving you about your your face. Don't touch it. Get my hands off of that right now.
Don't touch your forehead. Don't touch your face right now. Yes. Yeah.
I mean, it's one of those things where, you know, there's if you touch it, there's lots of penalties as well as this is the this is potentially the low point. Right. I mean, so if we weren't touching it in January when I was at the high point, then you kn
I completely agree. And do do what's best for your family right now. Stay safe. Sounds like the advice that we're getting is to stay home and, you know, try to figure out a way to make a new normal for your family and take advantage of it, too. This could be a good opportunity to make some bonding moments that you wouldn't normally have.
Yes, I know we are getting a little creative with finding projects to do with the kids we use, doing some gardening. Some cooking. Learning some things. But guys, if you can set aside even half an hour, you know, every day, make the phone calls, check to see what kind of benefits or or kind of hardship release you can get with your lenders. Also, talk with your state. You might have some benefits through your state that are unique, whether it's unemployment benefits or even talk to your employer. I know that's probably going to be a busy line, but leave a message that they can get back to you and take advantage of any problem, Gram, that you qualify for and use that. Absolutely. And then finally, I know this sounds crazy because we live in the age of up to date information, but don't panic. And if you feel like you're stressing out, take a step back from the screen.
Yeah, that's a good point. And also do your best to find credible sources for your information, too. There's you know, during times like this, there's a great opportunity for both people to spread misinformation and maybe make the panic a little worse.
So go with those trusted news sources and and people that you've always trusted and make sure that that, you know, you're sticking with that, because sometimes other things can come through and make you more nervous than you need to be.
Exactly. So, guys, this is just a quick chat. Thank you again, Kelly, for sending in my question. I think. So many people are in the same boat and asking, but stick with your plan, focus on the fundamentals. And if you ever have any questions, please, that the community, thriving families were there to support one another with money plus more. Leave a question in the comments!
Resources to Help Your Family
We want to share some resources available now (and will update later) that may be able to get your family some financial relief.
Various utility companies are announcing relief and breaks for their customers.
- Comcast/AT&T: Free access to their hot spots for everyone, including non-subscribers. unlimited data to its customers for no extra charge, for the 60 days. 60 days of free basic internet service to new customers
- Duke Energy / Pacific Gas & Electric/consolidated Edison/Southern California Edison: Offering flexible payment plans. Halted disconnections.
- T-Mobile/: Unlimited data for customers
The federal government has offered a student loan interest waiver for federal student loans.
You’re still required to file them by April 15th, but you can delay payment for up to 90 days.
Beware of Scams
Unfortunately there are those looking to take advantage of these stressed times. Please be vigilant and be extra cautious with your personal and financial data.
Photo by August de Richelieu from Pexels
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