Holy pandemic, Batman. If the past several weeks have made you consider becoming a doomsday prepper, read on. I have some ideas for weathering the tough economic storm brought on by COVID19, and some tips for improving your situation so you can better cope with future financial difficulties that may come your way.
Ideas for lowering your expenses
Everyone should want to save money where they can, but this is particularly true for Americans who have found themselves unemployed or furloughed during this health crisis.
1. Shop your homeowners and automobile insurance policies.
Homeowners insurance rate increases can outpace cost-of-living increases, so shop your policy annually to see if you’re getting the best rate. I did this in 2020 and decreased my homeowner’s insurance by $1,000.
It’s also a good idea to shop your automobile insurance annually in case there’s a better deal for comparable insurance through another carrier.
2. Ask for a lower interest rate.
If you have credit card debt, call the company and request a lower interest rate. Here’s an article on how to approach that conversation.
3. Stop eating out.
Life during a pandemic has taught me that cooking at home saves money. I miss lunch dates with friends, networking socials, and eating out on the weekends. However, I love the extra money in my bank account these days.
4. Cut the cable/phone cords.
There are cheaper television viewing options than cable that also offer local stations. Here’s a resource for alternatives.
Also, for the four of you in the country who still have a landline phone and have great mobile phone service in your area: Cut the cord and use your mobile phone.
5. Work out at home.
Closing all the fitness facilities during the pandemic has taught many people that good workouts can be attained outside the gym environment. Save yourself the membership fees and visit YouTube for virtually any workout you can imagine. A couple of my favorite instructors are Heather Robertson and Yoga with Adriene.
These are just a few ideas. Get more tips on reducing monthly expenses on Clark Howard’s website.
Tips for when you’re back on your feet
1. Create an emergency fund.
If you’ve learned nothing else from life during COVID19, I hope it’s the importance of saving for a rainy day. Dave Ramsey suggests in his Seven Baby Steps that you build a starter emergency fund of $1,000. Ultimately, three to six months of living expenses is recommended. This fund will provide future protection in the event of job loss or an unexpected big ticket expense.
2. Pay off debt.
Living life debt-free feels great and it frees you to invest in your retirement. Begin by paying off your credit cards, auto loans and student loans. Ramsey recommends listing all debts except your mortgage from smallest to largest balance and tackling them in this order.
3. Get life insurance.
Life insurance may help ensure your family is adequately prepared for life without your income in the event of a tragedy. Your spouse potentially could invest the life insurance proceeds and replace your income with the interest.
A financial advisor can offer guidance for planning for future fiscal needs, and helping you organize and prioritize many of your financial responsibilities. We also can help with your life insurance and annuity needs. Please call today if you would like more information.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss.