A recent poll found that nearly one out of every five Americans are experiencing financial hardship due to the COVID-19 outbreak and subsequent lockdowns.1 With reported infections soaring in recent weeks, financial stress could affect even more citizens as various areas of the country struggle to contain the pandemic.
However, what may happen in the future matters little to those who are experiencing financial difficulties today. If you’d like guidance on building a sustainable budget or strategies for future retirement income, we can help. It’s important to delay any unnecessary purchases and save any financial windfalls you may receive as long as the economic future remains unclear.
The following is a primer on some of the financial issues you may be facing and what to be aware of as you plan for tomorrow.
If possible, pause payments on all but essentials, like food, housing and utilities. This means tracking down expenses you may automatically pay on a monthly basis, such as streaming services and subscriptions. If you’re stuck at home, carefully consider what you may need to retain (like Netflix) versus what you do not (gym membership). Also, many utility providers — including phone, internet, auto lenders and insurance — are willing to work with customers to extend payment plans. When in doubt, call. It’s better to discuss options than miss payments and hope for the best.2
Use what resources you have, but try to avoid ratcheting up debt. Some credit card companies offer hardship programs designed to help cardholders through difficult times. According to NerdWallet, 16% of U.S. cardholders applied for hardship assistance in March and April of this year. These programs include options like reduced minimums, deferred payments and/or reduced or waived interest payments. Be aware, however, that entering such a program may result in a negative mark on your credit report. However, this option is better than missing or making late payments.3
Consider other options for borrowing money as well, such as tapping your home equity for a line of credit or refinancing your mortgage.4
The federal government has enacted a couple of protections for people who can’t pay their rent or mortgage. The first prevents lenders and landowners from foreclosure or eviction — a provision that was recently extended until Aug. 31.5 The Coronavirus Aid, Relief, and Economic Security (CARES) Act includes a provision for homeowners with federally backed mortgages. Homeowners who have experienced financial hardship due to the coronavirus pandemic can request a forbearance for up to 180 days. Forbearance permits the borrower to suspend or reduce mortgage payments for a limited period of time, but it does not forgive amounts owed. Those amounts may be tacked onto future payments or extend the life of the loan.6
The CARES Act also provided a provision to suspend principal and interest payments on federal student loans until September 30, 2020. Be aware, however, that this provision does not apply to older Federal Family Educational Loans not owned by the Department of Education, parent and Perkins loans, and loans issued by state agencies.7 However, these lenders may be willing to work with borrowers who call to request an amended payment plan.
Fresno Financial Consultant Takeaways
Fresno financial planning is our utmost concern here at Soutas Financial and we thought these takeaways were worth mentioning again. A recent poll found that nearly one out of every five Americans are experiencing financial hardship due to the COVID-19 outbreak and subsequent lockdowns.1 If possible, pause payments on all but essentials, like food, housing and utilities. This means tracking down expenses you may automatically pay on a monthly basis, such as streaming services and subscriptions. Use what resources you have, but try to avoid ratcheting up debt. Some credit card companies offer hardship programs designed to help cardholders through difficult times. The federal government has enacted a couple of protections for people who can’t pay their rent or mortgage. The CARES Act also provided a provision to suspend principal and interest payments on federal student loans until September 30, 2020.
Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with problems sometimes associated with retirement such as stopping spend down and avoiding probate. In doing so we leverage Legacy Planning as well as Tax Planning Strategies designed to help accomplish those goals.
When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial planning consultant is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning, Tax Planning, Strategies IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Soutas Financial & Insurance Solutions Inc.
333 W. Shaw Avenue Suite 106
Fresno, CA 93704
Content prepared by Kara Stefan Communications.
1 Fred Backus and Jennifer De Pinto. CBS News. June 4, 2020. “Nearly one in five say coronavirus has caused financial hardship.” https://www.cbsnews.com/news/coronavirus-pandemic-financial-hardship-cbs-news-poll/. Accessed June 25, 2020.
2 Yuliya Rzad. Consumer Finance Protection Bureau. April 17, 2020. “Tools to help when you can’t pay your bills.” https://www.consumerfinance.gov/about-us/blog/tools-to-help-pay-bills/. Accessed June 25, 2020.
3 Erin El Issa. NerdWallet. June 25, 2020. “2020 Consumer Credit Card Report.” https://www.nerdwallet.com/blog/credit-card-data/consumer-credit-card-trends-study/. Accessed June 25, 220.
4 T. Rowe Price. June 3, 2020. “7 Steps to Take When Facing Financial Hardship.” https://www.troweprice.com/personal-investing/resources/insights/7-steps-to-take-when-facing-financial-hardship.html. Accessed June 25, 2020.
5 Renee Rodriguez. Miami Herald. June 17, 2020. “COVID-19 foreclosure ban for homeowners extended through Aug. 31. But there’s a catch.” https://www.miamiherald.com/news/business/real-estate-news/article243598727.html. Accessed June 25, 2020.
6 Consumer Finance Protection Bureau. April 24, 2020. “Guide to coronavirus mortgage relief options.” https://www.consumerfinance.gov/about-us/blog/guide-coronavirus-mortgage-relief-options/. Accessed June 25, 2020.
7 Sheryl Nance-Nash. Newsday. April 27, 2020. “Money Fix: Lenders offering relief on student loans during pandemic.” https://www.newsday.com/business/coronavirus/coronavirus-student-loans-relief-1.43949927\. Accessed June 25, 2020.
Our firm is not affiliated with the U.S. government or any governmental agency.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc are not affiliated companies. California Insurance License # OK48173
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. Investing involves risk, including possible loss of principal. Insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Diversification cannot ensure a profit or guarantee against losses in a declining market. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 659682 – 6/20