Probably for most of your adult life, You heard the urgent advice – save money for an emergency fund.
In general, the goal that may not feel realistic when you live from paycheck to paycheck was to save three to six months. You know if you lose your job or develop a health problem.
Or face a global pandemic.
The novel corona virus, also often referred to as COVID-19, is clearly an economic as well as a health problem. It is currently threatening our health and our financial wellbeing. And probably many of us wish we had one or a larger emergency fund right now.
If your emergency fund is missing, don’t kick yourself too much. You are hardly alone.
With the last Fed pollIt turned out that 39 percent of Americans would have difficulty paying for a $ 400 emergency. That’s 4 in 10 Americans who take out a payday loan, borrow from friends or family, or don’t have to do anything, reported some of the options reported by reviewers.
So if you are worried about money and want to set up a last minute emergency fund, we have some practical ideas.
And we promise that we won’t get too lame and suggest things like recycling cans or selling farms, which of course would probably not be very well attended at the moment.
1. Reduce the pension contributions
If you saved in a 401 (k) and your IRAs every month, you should now reduce the contributions – and use this money for an emergency fund.
For example, instead of putting away $ 400 a month, enter $ 100. If you’ve retired $ 100, you might be able to get away with $ 50.
If you go this route, you can redirect the money you would have spent on your retirement and send it to a separate online savings account.
Even if the interest you collect is not very high due to falling interest rates, it is at least far less likely that you will spend the money if you separate it from your checking account.
When you get a 401 (k) matchIt is up to you to determine how much risk you take by choosing not to contribute enough to the game.
These matching contributions are money that you would lose.
Robbing your future to get through the present is a painful idea, but the hope is that you can catch up on payments later in the year.
2. Consolidate debt
If your creditworthiness is healthy and you have unhealthy debt, this may be a good time to consolidate the debt at a lower interest rate.
A popular option is a credit card with 0% credit transfer.
As in, transfer the credit card debt to the new credit card.
Then you avoid interest expenses Reduce your monthly payments, which means you have more money each month to build an emergency fund.
The same applies to personal loans, which may not be subject to the introductory 0% APR offers, but which are low over a much longer period (typically 3 to 5 years).
3. Interrupt the repayment of the student loan
Hopefully this is not news for you, but when the stimulus package was recently passed by Congress, Student loans were suspended until September 30th.
Yes, you can still make your student loan payments if you want, but there is no penalty or interest if you don’t make them.
So if you are a student borrower and you have student loan payments but no emergency fund, provided you are still working and money is flowing in, this is your chance to easily create one over the next few months.
4. Use your tax refund
Although the tax period will be postponed from April 15 to July 15, you should apply for your tax refund as soon as possible, provided you know you are getting one.
With online tax preparation, electronic filing, and direct deposit, you can usually get your money 2 to 3 weeks after filing.
On the other hand:
Returns of paper with paper checks usually take 6 to 8 weeks.
But when your reimbursement comes, it can be a significant inflow of money into your emergency fund.
5. Check your expenses
Ask yourself if you regularly pay bills that you might drop.
In the past, financial experts suggested that people quit their daily coffee habit to save money. Now everyone is suggesting deleting a streaming service that you are not using.
In the age of corona virus and on-site protection, deleting a streaming service may be the last thing you want to do, but on the other hand, maybe you have one to get rid of?
Maybe you subscribe to a non-streaming service that you could get rid of?
Or are you still paying for a gym membership that you haven’t used in years and that you can’t use now because it’s closed?
Not that we want to add to the financial problems of your local gym, but if you need extra money, look at what you spend monthly, which just doesn’t make sense.
If you don’t cancel an invoice, you can contact the biller, such as a cable or cellular company, to discuss how to reduce your payments.
If you reduce or eliminate some bills, you should be able to divert some of that money to an emergency fund.
If nothing else, you may improve your cash flow.
6. Look for missing money
No, this is not a classic, but lame if you search the sofa cushions for coin suggestions.
You probably don’t have much cash with you anyway. It’s all digital money. But if you’ve never been there MissingMoney.com or Unclaimed.org, Look at her. They are both operated by the National Association of Unclaimed Property Administrators.
You may have left money in a bank account years ago, or you may have undrawn stocks or bonds.
It’s probably a long way, but it shouldn’t take you more than a few minutes to find out if you’ve lost any money.
That said, you will likely find that the Covid-19 interruptions send the money to you more slowly than normal.
Applying for a line of credit
We mention it because there is something to be considered.
If a financial emergency is imminent, e.g. For example, losing your job, a credit line can later lead to a financial emergency.
But sure, if your finances seem to be in good shape and you just want to make sure you have a source of money to fall back on, you can apply for a home loan or personal line of credit.
Still, lenders will be suspicious of offering credit lines now.
The best time to get a line of credit is when the economy is healthy – and your own credit history and history is strong. Getting a line of credit during a global pandemic will always be difficult to achieve.
Life has temporarily changed for almost everyone reading this, but on the plus side, it could mean that more money is left for your emergency fund at the end of the month.
We mean the following:
Gas prices are currently at a four-year lowthanks to lower demand (we drive less) and a price war between Saudi Arabia and Russia also helps reduce fuel costs. So if you’re still going to work, you’re paying less for gasoline than a month ago. If you’re working from home, you’re obviously spending money a lot of less on gas.
So if you can, put the money you have planned for gasoline in your emergency fund. That’s probably a few hundred dollars right there.
Your grocery bill has probably increased, but maybe your restaurant bill has dropped?
Enter your grocery cost numbers and see if there is likely to be more money left at the end of the month. If so, that could also go to the emergency fund.
If you have a clothes allowance, you are likely to spend less on working from home.
Maybe you can divert some of the money you would have spent on clothes to an emergency fund.
This is likely to be a long way, but if you don’t go to work, your car insurer may offer you a discount.
That would add a little more money to your bank account every month.
The main point is – your life has probably changed in some way since the start of the placement.
If you spend less money and, in the first place, had a pretty good grip on your finances, you may be able to direct some of that excess income into your emergency fund.
The hope is that you will be able to put away a lot of money quickly and consistently – and have no reason to raid your emergency fund.
If this happens later, when the coronavirus threat decreases and life returns to normal, you can return part of it to the 401 (k) or IRA that you haven’t paid at any time – or use part of the money to continue A vacation and a miracle that you came through this crazy pandemic.
However, if you don’t use your emergency fund, you obviously keep some of the money in your fund and continue to save money for a future rainy day.
If the corona virus means we all emerge from it, budget more carefully, and keep the habit of saving money, this is at least an advantage.
It’s just a shame that many of us need an actual emergency to remind people to save for an emergency.