Your Money: A coronavirus emergency plan for paying your bills

FILE PHOTO: Illustration photo of a U.S. Dollar note
FILE PHOTO: A U.S. Dollar note is seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration

March 18, 2020

By Beth Pinsker

NEW YORK (Reuters) – Lives are on hold all over the world as we distance ourselves socially to contain the coronavirus, but bills still pile up.

Some countries, like Italy and France, already enacted mortgage and rent relief, but U.S. measures are still being worked out for the most part, aside from a waiver for student loan interest.

Now is not the time for lectures on the value of having an emergency fund.

“You can’t just go pick up a side hustle right now,” said Erin Lowry, 30, author of “Broke Millennial,” a financial advice book that attempted to prepare her cohort for a rainy day such as now.

Many people, regardless of whether they can telecommute, have had their hours cut, have lost their jobs or are facing some kind of financial crisis. We are at the point of making the best worst choices.

Here are some ways to prioritize.

1. Assess the damage

First thing, Lowry said: “You have to face your numbers.”

Do not think of this as budgeting, because the situation is changing so fast you cannot really think long-term. Take a breath and just deal with this month.

What bills are due? How much cash do you have on hand?

2. Stall fixed debt

Your lenders and banks have probably already sent you a very sympathetic email about how they are there for help.

“We want to share some ways we are here to help you in this current environment,” Citibank says on its coronavirus web page currently.

Take them up on it.

“Consumers who are the most proactive and say, ‘Here’s where I stand,’ will get a lot better response than those who do nothing,” said Lynnette Khalfani-Cox, CEO of AskTheMoneyCoach.com and author of “Zero Debt.”

This goes for home loans, auto loans, student loans and utility payments.

3. Prioritize your needs

If it comes down to it, prioritize housing, because you need to keep a roof over your head, Khalfani-Cox advised. Owners will get a lot more leeway than renters, because it takes a long time to get through a foreclosure process.

Renters, especially those dealing with a small landlord they may know personally, may feel more pressure to pay. Lowry said the key is to know the rights in your state, so you are not bullied by misinformation, like a landlord saying they can change the locks or throw out all of your stuff if you cannot pay.

“Landlords do not want property sitting empty right now, so see if you can work out a deal, like maybe you can pay 25%,” Lowry said.

During the 2008-2009 recession, Lowry encountered a woman who prioritized her car payment over rent, because she needed transportation to get to work. Her fallback was that she could sleep in her car. “That’s something that a lot of people are going to face now,” said Lowry.

4. Ride your credit cards

No travel, no restaurants, no shopping sprees at the mall, no online shopping impulse buys.

Check.

We are all on spending austerity plans because of social distancing.

But there are some essentials you might have to front if you have job loss or reduced income.

If you do not already have an adequate credit card, there could be a delay in approval and delivery of a card. But there are some credit cards you can get right away, depending on your financial fitness, like Amazon’s and Apple’s cards, said Matt Schulz, chief industry analyst at CompareCards.com. You can use those on your phone for mobile quick pay or for online purchases.

“With credit card debt, the advice is always to pay more than the minimum, but when it gets down to it and all you can do is pay the minimum, that’s not the end of the world,” Schulz said.

The key is not to miss a payment completely. You will face fees and go into a penalty interest rate, above the already sky-high average of about 16% even after the Federal Reserve’s latest rate cut. In a recent survey, CreditSesame.com found that one out of five Americans missed a payment of some sort in the past 12 months. The average missed payment was just $38, but that still dipped a person’s credit score by 45 points.

“When there is financial crisis and uncertainty, managing cash and credit is going to be critical,” said Adrian Nazari, CEO of Credit Sesame. “You need to sort out the least bad option.”

(Follow us @ReutersMoney or at http://www.reuters.com/finance/personal-finance. Editing by Cynthia Osterman)