Staying positive and planning for the future sounds great. But that optimistic outlook can be tough to maintain when unemployment benefits are running out, life is still a bit up-in-the-air, and your savings are nearly gone. We have some advice to help you sleep a little better, rebuild your funds, and get ahead of our economy — even if it is just a little.
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Things were expected to be all hunky-dory by now, but they're not. Now, mortgage and other loan payments are coming due. Getting a loan extension is a great short-term option, as extensions are normally designed to defer 1-3 payments. If you're in need of a longer-term solution, ask about a loan modification. By modifying your loan(s), you may be able to restructure and reduce your payment obligation for a longer period of time.
Refinance Your Loans
To stabilize and protect the economy, the Federal Reserve slashed interest rates to record lows. These decade-low interest rates could save you money if you choose to refinance your mortgage, private student loans, or other debts. Keep an eye on your closing costs, loan terms, and overall payment savings to ensure you make a smart decision. Watch our chat with One Nevada's Chief Lending Officer, Tom Ernsperger, for some great refinancing tips.
Set a Savings Goal
Before getting started on saving up money, it's a good idea to establish a tangible goal. What's your magic number? You can try to recover the value of the savings lost, or start smaller, with a more attainable goal. Bear in mind that experts recommend having funds to cover three to six months' worth of living expenses set aside in an emergency fund or savings account, but don't let that intimidate you. Every little bit helps.
The best way to ensure regular savings happens each month is to make it automatic. You can set up an automatic monthly transfer on any day of the month you choose. But, you may want to have the transfer go through several days after you receive your monthly salary or other benefits. Some members choose to have smaller amounts automatically put into savings each week.
Cut Your Spending
A good place to start finding those extra dollars for savings is by carefully reviewing your spending for ways to cut back. Look for expenses that can make a difference in a monthly budget without dramatically affecting your quality of life. Think about subscriptions or services that are rarely used, a dining-out budget that can be scaled back and expensive recreational activities that can be swapped with freebies. Stripping your budget of some extras can give you the boost of cash you need each month. If another Coronavirus stimulus check comes your way, consider putting the money into your emergency savings account. Earmarking future windfalls for savings can shorten the amount of time spent cutting corners in a budget and taking on extra jobs to build up a savings account.
Don't Touch Your Retirement
Chances are that when you set up your 401k or IRA you picked a diverse asset portfolio, and selected a monthly contribution that you were comfortable with. This is the time to trust your decisions and keep the money where it is. However, there are actually some tax breaks for members to tap into their retirement funds if needed. Read about the CARES Act: Retirement Plan Relief Provisions. If absolutely necessary, stop funding your retirement for a short while. But promise yourself that you'll restart investing once things return to normal.