Developing a Strategy for Setting Financial Priorities in Troubled Times

The rapid onset of the current financial effects of the public health concerns due to COVID-19 have impacted many, if not most American families in a very direct and often dramatic way.  Developing a strategy for coping with the financial impact of the current public health emergency should be part of an overall strategy for ensuring you and your families well being.  An important step in developing and implementing an effective financial strategy is to set priorities for your finances and then reach out to your lenders in a constructive manner.  You should consider the following in setting financial priorities:
 
(1) Housing
 
Housing and food should be your top priorities.  Many utility companies are offering payment assistance or have discontinued disconnection of utilities for the foreseeable future.  
 
If you have a mortgage and are experiencing difficulty making your mortgage payment you should reach out to your loan servicer as soon as you can.  Contacting your loan servicer before you fall behind is often more beneficial and productive in the long run.
 
Several federal housing agencies are urging mortgage servicers to offer borrowers options to reduce or suspend payments and most major mortgage lenders are implementing programs that may allow you to delay or waive payments.  Many of the major mortgage lenders have put together a specific web page in response to the corona virus which may provide helpful information.  Although personal contact with a loan servicer representative may be the more helpful than a web site, telephone representatives may be a bit overwhelmed for awhile.  If you are able to speak to a representative personally explain your situation and ask them if there are any programs in place to assist you in the short term.  
 
If you rent speak with your landlord or on-site manager.  If you are able to make a partial rent payment then offer to make that partial payment and offer a plan for making the missed portion of the payment over time.   Followup with a letter or email confirming any agreement.        
 
(2) Auto loans
 
Reach out to your lender, bank or credit union.  It is important to communicate with the lender before you fall more than one payment behind.  The lender may have a hardship program that allows you to skip a monthly payment.
 
(3) Credit cards, unsecured personal loans and student loans
 
Loan payments for loans not tied to any collateral should be well down your list of priorities.  However, this does not mean you should ignore unsecured lenders.  You should contact these creditors as soon as possible and ask for hardship concessions. This could include skipping payments altogether or making interest-only payments.
 
 
(4) If possible try and avoid taking on additional debt or be selective about the additional debt you take on
 
Banks and credit unions may offer short term loans to assist you in a time of need.  A short term loan may be worth considering to tide you over until you can return to work.  You should avoid payday loans, otherwise known as cash advances. Although these loans are easy to get and therefore very tempting they are incredibly expensive with interest rates that often exceed 400%. (compared to credit card interest rates which typically run between 12% and 30%).
 
The preceding is of course only an overview offering general information.  In troubled times it is often critically important to seek out and receive specific information and advice regarding your situation from an experienced and compassionate professional.  
 
The attorneys at Kinkade & Associates welcome the opportunity to meet with you personally to discuss your situation and provide you with detailed personalized information about the options and a strategy that are best suited to your family’s circumstances.  Please contact us through our web site or give us a call to schedule your free no obligation initial consultation with a local attorney.
 
Thank you for visiting our web site and considering Kinkade and Associates.  
 
Kinkade and Associates, helping families rebuild their financial life.