Practical financial advice: How to recover from COVID-19
Updated: Jul 6, 2020
This article was submitted by Merrie Allmon Allen, a Certified Personal Finance Educator and author of Money Management Wisdom: 8 Steps to Living Your Best Life.
No one was quite prepared for the COVID-19 pandemic and the emotional and financial impact it would have on so many—especially on people of color. Loved ones have died from this virus. Individuals are no longer allowed to move about freely. And if that were not enough, thousands of individuals are losing their jobs and struggling with necessities.
Although the CARES Act provides some economic relief, the fact is, this crisis will cause some people to be in a depleted state with their finances and they’ll have to rebuild from a very deep hole.
Whether it’s COVID-19 or another crisis that has found you in a critical financial position, there are seven things you can do to cope and recover.
1. Accept the situation. It is what it is until it isn’t anymore. Know that this is where you are. Accept that things are different and that you’ll have to make temporary adjustments to your way of living. Do not stress (easier said than done) or blame yourself. Save your energy for your journey back to normal.
2. Let go of your pride. Don’t be ashamed to accept the assistance offered by the Federal government or your local community agencies. Apply for unemployment. Visit your city and county websites for information on where you can apply for assistance with rent or mortgage, utilities, and food.
3. Go into survival mode. Focus on the most important things like food, shelter, utilities, and transportation. If you can, pay the minimum payment due for all other obligations. If you can’t pay the minimum, prioritize your bills by worst-case scenario. Ask yourself, “Which unpaid bill will have the most adverse consequences.” That bill would be the first on your prioritization list. Decrease your expenses to free up extra money. Sell unwanted or unused items.
4. Contact your creditors. Let them know that you have been affected by COVID-19 and ask what they are offering as it relates to deferring or reducing payments. The CARES Act allows for deferments on mortgages and student loans. Be sure to check with your creditors for specific details.
5. Create a budget. If you’ve never kept track of your money, now is the time to start. You must be very careful to know what you’re working with and where it has to go. With money being very restricted, you must account for every dollar to identify areas where you can realize savings by cutting any unnecessary expenses. For a simple budget, visit EveryDollar.com.
6. View this period as an opportunity. What seems like a bad situation may be your chance to move in a different direction. Take inventory of your life, possessions, career, etc. What would you change and how could you start doing that today? Do you want to change careers? What new skills do you need to make that happen? Perhaps it’s a good time to right-size your material possessions—a less expensive car or a smaller home.
7. Know better, do better. Remind yourself of the lessons learned and be prepared for the next crisis. Start building an emergency fund, live beneath your means, and minimize debt. This will ensure that you’re in the best possible position to handle a financial crisis in the future—God forbid.
There is also a one-stop resource page here for Hillsborough County residents who need assistance with food, shelter (rental and mortgage assistance) , medical bills, job reemployment, etc. Small businesses can receive help as well.
Life can be unpredictable, and we can never be prepared for every crisis that comes along. But whatever happens, you can rest assured of two things: God will always take care of your needs (Matthew 6:28-34), and He will never abandon you (Hebrews 13:5). As bad as things may seem, they will get better. The same drive, wisdom, and skills you possessed before the crisis are still inside of you waiting for the opportunity to be stirred. You will rise again.
Merrie Allmon Allen is a Certified Personal Finance Educator and author of Money Management Wisdom: 8 Steps to Living Your Best Life and Money Management Wisdom for Millennials. Visit MoneyManagementWisdom.net