As I was going through some personal finance rules that are very good to follow, I thought of the individuals who may be experiencing economic hardship and how this may be conflicting information. If you don’t have any income, no money coming into your household, then some of the rules don’t make much sense for you to adhere to at this time. You have to play by a different set of rules until the situation changes. Throw out the personal finance rule book until you have an income again. Know that it is ok and it is just for the time being. You already have enough to stress about. Don’t think you need to beat yourself up about breaking personal finance rules. Check out which rules you should throw out.
1) Don’t pay double.
The rule is to pay more than the minimum payment on your debt, credit cards, student loans, mortgage etc. However, if you’re furloughed or laid off then go back to making the minimum payments. Also, call the credit card company and request to lower your interest rate. If you’ve been a loyal customer who pays the bill on time then you should be able to get it lowered and possibly waive any annual fee if you have one associated with the card. If you have student loans then call the company and determine if you are eligible for forbearance. Don’t just ignore the debt payments, call and try to lighten the payments first. This will alleviate you making those payments for a while. You’ll have to stop aggressively paying down debt until there is more money.
2) Stop the automation.
If you have many of your bills being automatically taken out of your account, stop the automatic bill pay. I know automation makes life easier and usually I’m all for it, but you’re playing by a different set of rules right now. Analyze your bills to see what is being taken out and see if there is any way to cut costs or eliminate certain bills. For example, stopping the magazine subscription or gym payment will free up much needed money. Analyze things like your cell phone bill and pare down anything that you don’t use often or to the full extent. Sometimes, when we have bills paid automatically then we forget what we are truly paying for or don’t notice when something is added to the bill. Scrutinize everything.
3) Don’t contribute to savings.
Stop contributing to your savings fund. You’re likely (at least I hope you are) saving up for an emergency fund or long-term solutions like retirement or children’s education. During hard times such as a furlough or being laid off, pause from making contributions to these accounts. I say pause because you will start back up again. Don’t touch the money in your long-term money funds except if there is a dire emergency. Dire emergency! Just let the amounts that are already in there, stay there for when you need them. However, don’t continue to add money until you know when you’ll have more money coming into the household. Live off of your emergency fund. Furlough or being laid off is an emergency.
Normally, you want to never pay the minimum on credit cards or other debt, automating is a great thing that helps you stay on track and you want to save. However, when your income stops or is indefinitely delayed these rules may cause you to get into trouble rather than keep you out of it. Change up the rules while you’re in this situation and remember to add a de-stress activity to your routine. A de-stress activity is something that helps you to refocus and stay positive. Make it something free that you can do anytime and won’t add to the stress. I know you may need to develop a new one if your previous one involved spending money. The stress won’t be gone but you can manage it by changing the rules and using a de-stress activity.