The U.S has seen nearly 17 million unemployment claims in the past 3 weeks. The economy is being ravaged by the coronavirus and many are scrambling to pay their bills. During this time of great uncertainty, typical financial advice may not fit. Below are 5 ways to access cash in the midst of a global pandemic.
If you have been laid off this is the first thing you should do. The newly passed stimulus bill allows for contractors and gig workers to apply. In addition, the federal government is giving all laid off workers another $600 a week on top of your states benefits. However given the surge in applications be ready for long wait times.
Regardless of employment status some American’s will be getting as much as a $1,200 boost. The IRS started depositing the first wave of checks this past weekend. If you can do without these extra funds right now, consider padding your emergency savings account.
The $2.2 trillion stimulus bill lets borrowers who have federal student loans forgo payments for up to six months without accruing interest. However if you do have the funds, consider paying directly towards the principal. Which can save you a good amount of money in the long run.
Again, like most things mentioned, the idea of pulling from retirement stops every financial advisor in their tracks. So why would it be a good option now? The CARES Act is allowing individuals to withdraw up to $100,000 out of retirement accounts. There is no penalty or tax consequences for withdrawal if the money is put back in within 3 years. If your confident you can repay the amount you withdraw, this may be a great option.
However, you must complete the paperwork through the IRS to receive this benefit. It also may be worth noting that given the decline in the market, withdrawing from these accounts means you’re locking the loss in.
Normally, credit cards would not even be on this list. Again, these aren’t normal circumstances. Opening a card with an introductory 0% APR, could buy you some time. Many companies offer 12-18 months for this type of promotion. Don’t want to open a new card? Some companies are offering 0% to existing customers, just call and ask. No interest could help when trying to get back on track financially. That being said, taking on credit card debt should only be for when you exhausted all other options.
There are a number of community based programs that are offering help to their neighbors, whether it be food banks or relief funds. There are programs in all 50 states.
If your family or friends have the capacity to help out, now may be the time to ask for a gift or loan. A loan from someone you know can mean a more flexible payment agreement than one from the bank. Although, the emotional aspect of borrowing money from family and friends should not be ignored.
Given these unprecedented times, options for financial assistance are more readily available. Just make sure you choose the option that will be best not only in the short term, but also the long term.