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The coronavirus has not only been ravaging the healthcare system, but also the economy. Americans in every part of the country are struggling during this uncertain time. If you are struggling financially it’s important to get the help you need without setting yourself up for future hardship. Here is what not to do:
The IRS has extended the filling deadline for 2019 taxes from April 15 to July 15. If you owe taxes, waiting gives you extra time to pay. However if you will get a refund, you should file asap. These influx of funds can help through this trying financial time, build your emergency savings, or pay down debt.
A number of lending and utility companies are suspending payments for individuals facing hardship due to the coronavirus . But this is not automatic, you must contact your provider. If you just stop paying you will still incur late fees and missed payments. These will not only add to your debt, but will also adversely affect your credit score. In turn making it much more difficult to borrow money post pandemic.
However, the federal government has granted automatic student loan forbearance for all loans owned by the federal government. In addition no interest will accrue between March 13 and September 30, 2020. During this time you can still make payments, no interest will accrue and your payments will continue to pay down your loans.
This one may be a no brainer, but it is vitally important right now. If you have been laid off or your hours have been cut, file as soon as possible. Unfortunately, unemployment has reached 20% and continues to rise. 26.5 Americans have already filed for unemployment. File as soon as possible, given the amount of individuals filing you may experience a lag in benefits. The federal government is also adding an additional $600 a week to state benefits. Don’t wait, receiving that money in a timely fashion can make a world of difference during this uncertain time.
The federal government is now allowing individuals to pull up to $100,000 from retirement accounts, including 401(k)s and IRA’s without penalty. Which may sound like a great idea? But that means pulling from your long term financial future. In addition, given the markets downturn you’ll be locking in your losses, not giving the market any time to rebound. You’ll also have to file paperwork with the IRS and agree to pay back the entire amount borrowed within 3 years.