Cutting Expenses During COVID-19 Unemployment

The economic shutdown when COVID-19 started spreading across the United States left a lot of people unemployed. Even though most businesses have reopened, unemployment still remains high. Many businesses have restrictions on how many customers they can help at one time. Smaller shops as well as bars and restaurants are making less money because of necessary social distancing requirements. Therefore, they aren’t hiring all of their staff back. Even offices with restricted capacity may be doing without some of their administrative help. If you are unemployed, you may be trying to stay afloat as well as protect your credit score.

Cut Expenses

The need to cut expenses goes without saying. This may be an overwhelming task. If you’re wondering where to start, begin by looking at your monthly budget. Give everything a grade of 1 through 5 based on necessity. Start cutting out those in category five and work backward until your budget works. You can do this gradually. Cut back a little for the first three months. If you don’t get back to work, cut back some more for the next three months. Don’t forget to trim some costs such as grouping errands to reduce gasoline expenses and eliminating extra phone features, if possible.

  • The number 1 category would include those things you can’t live without such as groceries, the rent or mortgage payment, healthcare, and utilities.
  • Number 2 would be things that won’t kill you if you don’t have them but are necessary to maintain a simple lifestyle. This would include your minimum debt payments, internet, phone, childcare, and transportation.
  • The number 3 category would include optional lifestyle expenses such as gym and club memberships, restaurant or takeout meals, subscription services, storage unit rent, and entertainment streaming.
  • Category number 4 would be things you can go for weeks or months without. New clothes, video game purchases, tattoos, accessories, donations (unless you’re giving items to thrift stores), and new technology.
  • Category number 5 is the money you put into various accounts: emergency accounts (you may need to draw on this at this time), investments, vacation funds, holiday and gift funds, and new furniture. You can catch up on these later.

Prioritize your Debts to Keep Up Your Credit Score

Prioritize your debts according to this article here. Taking a hit on your credit score is a better option than losing your house. Also, contact your creditors and see if you can negotiate temporary payment plans. During this time, they are trying to work with people. You can also do this with your utilities.

Do Odd Jobs

Consider getting a temporary job that may pay less than what you were making but more than unemployment. There are many remote positions available as part of a call center, a virtual assistant, a mortgage processor, or doing data entry. Also, check help wanted listings on Craigslist and other sites.

Seek Assistance

If you have a lot of medical expenses, the Administration for Children and Families is part of Health and Human Services (HHS) and has grants available to help. HHS also has a Low Income Home Energy Assistance Program to help with heating bills. The Supplemental Nutrition Assistance Program is a part of the Food and Nutrition Service and supplies aid to those who need help with grocery bills. There are many other federal government programs to help. There are also charity and church groups that have programs to help those in need during this time.

Longer Term Solutions that Might Not Help Your Credit Score

If it looks like you need to think longer term, there are debt settlement programs to negotiate on your behalf to write off a portion of your debt and leave you a smaller balance, with smaller payments, to pay back. As a last resort, there is always personal bankruptcy. Both of these programs should be last minute considerations as they will damage your credit score.

This Too Will Pass

You are not alone in this. There are many people who are in this situation and there are also many people who are able to help. Don’t be afraid or embarrassed to ask for help.

TGUC Financial can help with business loans, credit card refinancing, debt consolidation, and taxes. Contact us today.