Months of staying at home and social distancing has left the economy in disarray. As businesses begin to reopen and jobs come back to our area, it’s time to take steps to improve your financial condition and reestablish your financial goals. The pandemic not only brought health concerns but financial worries as well. Businesses closed, millions lost jobs, and many struggled just to make ends meet. Here are 6 tips for recovering financially.
- Overhaul your budget. Changing times means changing your lifestyle and adjusting your budget to adapt to different needs. There’s no better time to cancel unnecessary subscriptions and memberships and eliminate non-essential spending. Do all you can to resist the urge to overspend when things begin to open back up.
- Focus on saving. This includes building up an emergency fund. If you had one already in place, you may have not felt the economic sting as much as others with no savings. Ideally, you want to have a minimum of six months of living expenses set aside in a dedicated emergency savings account. It can be any type of account, but it should be earmarked strictly for emergencies. Still have that stimulus check? Tuck it away in your emergency savings account. Depending on your emergency saving goals, you can use a traditional savings account, a money market, or even a club account. Choice One Community Credit Union has a variety of options for every savings need. The more money you have put aside, the better able you’ll be to face any situation.
- Pay down high-interest credit card balances and other debt. Lack of an emergency fund may have led to filling the gap in income by relying more on your credit cards for various expenses. When the dust settles, you may be facing high balances on several cards. In order to get ahead financially, you’ll need to pay down these high credit card balances. If you are overwhelmed by numerous payments, you may choose to transfer the balances of higher interest cards by taking advantage of a lower-interest balance transfer special. Choice One Community Credit Union is currently offering a 2.99%* APR VISA balance transfer rate with no balance transfer fee and no annual fee. The special rate will be valid for 6 billing cycles before returning to the current rate at that time. A balance transfer may buy you the time you need to put a dent in those higher balance card balances.
- Take advantage of extremely low-interest rates to refinance. Refinancing can help you inject some extra cash in your budget to pay down debt or build your emergency fund. Consolidating high-interest loans into a lower-interest option or refinancing a high-interest mortgage can help you save significantly on interest over the life of a loan. You’ll just want to run the numbers to ensure the interest savings justifies any closing costs. If you’ve been worrying about your federal student loan, The CARES Act, which was signed into law on March 27, 2020, suspended payments on federal student loans held by the U.S. Department of Education for 6 months. The deferral buys you some time to catch up on other payments. Take note, this only applies to federal student loans. The payment suspension was automatic. Click to learn more.
- Continue to contribute to your retirement account. If you’ve tapped into your retirement savings to help pay bills, try to put that money back into your account as soon as possible. Although it may be tempting in tough times to free up cash by eliminating your retirement contributions, it’s not a smart move to make. Stay focused on your long-term goals. According to the IRS, in 2020, you can contribute up to $6,000 in your IRA or $7,000 if you are 50 or over. Your deposit may not be tax-deductible if you are also contributing to a 401(k). Talk to your tax advisor for more information.
- Finally, stay calm and focus on your goals. Don’t let fear chart your course for the future. If you didn’t have an emergency fund built before, the economic impact of the pandemic should encourage you to build one as soon as possible. It is our hope that enhanced unemployment benefits, stimulus payments, and deferred payments offered by many lenders helped you to get through the past few months. We realize these are stressful times, but careful planning and a strong focus on saving can help you back on solid financial ground. Choice One Community Credit Union is always here for our members and our community.
*2.99% VISA Balance Transfer Rate is valid for 6 billing cycles from the date of transfer. Rate returns to the current rate at that time. Choice One’s current Platinum Visa Credit Card Rate is 8.90% APR and Classic Visa Card is 13.50% APR with No-Annual Fee. Balance Transfer offer is good on any new or existing Choice One Platinum or Classic Credit Card. 2.99% balance transfer rate is for balances transferred from another institution only. Transfers may not exceed the credit line a member is approved for.