The coronavirus pandemic has tanked national and local economies. Many families are struggling to keep their heads above water. The financial fallout of this global health crisis will likely be felt for months and years to come
WKAR's Mary Ellen Pitney spoke with Denise Keiser of Balance, a financial wellness organization in Lansing, to discuss what people can do to keep themselves financial healthy during this time.
Interview Highlights
In Sickness and Financial Health
I think it's going to affect most of the industries that we have in the country today. Even if we're still working and earning an income, there's some things that those of us who are collecting a paycheck can do.
Even after lockdowns are lifted and life resumes, the financial burden of the COVID-19 pandemic will likely be felt for months, if not years to come. The illness may be acute, but the financial strain will likely be chronic. Denise Keiser explains the importance of financial health in a world focused on global health.
The Four Pillars
Your immediate needs typically include four things: housing, so shelter, you want to make sure whether or not you're renting or owning that you're going to be able to continue living in that home and taking care of your family. Food is the second thing. We need to be able to feed ourselves and stay healthy. If we're prescribed any kind of medication, that's absolutely a necessity. And then, of course, utilities.
If a house ever finds itself without an income, Denise Keiser says the most important thing to do is prepare a crisis budget by first considering the most basic of necessities. Adding up the costs of these four categories can give one an idea of what they need to survive every month. From there, a person can start to balance it with any income or assistance they may be receiving. Keiser says to try and balance the two by sticking to the budget of these four basic items as much as possible.
Some Assistance Please
A hardship is anytime that you're experiencing either a loss of income or an increase in expenses for something that was out of your control. Part of the stimulus package that has been passed by Congress and approved by the president encourages, and sometimes mandates, each of those lenders to do certain things.
People with mortgages or student loan debt may have options available to prevent or delay defaulting on their debts. Keiser says it is important to protect your home. Homeowners may want to consider a forbearance, which allows them to go a period without making mortgage payments. Folks with folks with federal student loans could look at requesting a six-month deferral period that works in a similar way.
Interview Transcript
What is financial health?
Good financial health means that we're able to handle a storm when there’s storm, and that means we have a financial cushion. So, starting with a financial cushion in the form of emergency savings is probably the most important thing for today's times.
We have an idea about who's affected by the economic shutdown in response to the Coronavirus pandemic. Are there any other groups besides servers and retail workers that we haven't really heard of that are feeling the squeeze?
The good thing is that the there's a lot of people that are still working. The unfortunate thing is that there's so many different industries that are currently affected or will be affected in the future. I think it's going to affect most of the industries that we have in the country today. Even if we're still working and earning an income, there's some things that those of us who are collecting a paycheck can do.
What are some of those things that people can do right now to bolster their financial security and help?
If you don't have an income, it's the most important thing you can do is prepare a crisis budget, so that you can look at your needs. Your immediate needs typically include four things: housing, so shelter, you want to make sure whether or not you're renting or owning that you're going to be able to continue living in that home and taking care of your family. Food is the second thing. We need to be able to feed ourselves and stay healthy. If we're prescribed any kind of medication, that's absolutely a necessity. And then, of course, utilities. Everything else we can figure out a plan for in the future. But let's make sure we have a place to live, make sure we can feed our families and get the medications that we need to stay healthy.
For somebody who hasn't budgeted before, what do they want to do to kind of get their budget off the ground?
The simple thing to do is just pull out a sheet of paper and make two columns. In one column, you're going to put all the income and benefits that you have coming into your household. That means you're including any paycheck that you're receiving, the net amount of it, any benefits, food assistance, unemployment payments, whatever it is that you're receiving in benefit; add that into the resource column. The other column, you're going to list all of your expenses, and this might take a little bit of work if it's the first time you're sitting down to do this. You want to pull out your checkbook. If you don't use a checkbook, pull out your bank statement and look at all the things you've been spending money on; you might be a little surprised. Don't forget to pull out your credit card statements as well and then you can start to get better as you look into those statements and start tracking. Then you start reconsidering, do I really need to go to the grocery store this week? Perhaps there's something in the freezer or the refrigerator or the pantry that we could use to get by until the next month starts.
Speaking of credit cards and loans and things like that, I've heard that there's something called a hardship deferral where if you have a mortgage or a student loan that you can't pay at the moment, you can basically ask to press pause on those payments. What is a hardship deferral and how do people apply for that?
A hardship is anytime that you're experiencing either a loss of income or an increase in expenses for something that was out of your control. Part of the stimulus package that has been passed by Congress and approved by the president encourages, and sometimes mandates, each of those lenders to do certain things.
Let’s start with student loans: this is something that is a positive for folks that have federally insured student loan. You can have a six-month deferral period, which means that you're not required to make payments. Also, interest is not accruing, and you're not going to be penalized for late fees.
Now we can talk about mortgages: if you're a homeowner and you have a mortgage, you want to make sure that you do everything you can to make the housing payment, the first payment of the month that you make. But let's say you just don't have enough money to make your mortgage payment. In that case, you want to call your lender as soon as you know you're going to have trouble paying the payment, because the lender will offer alternative options. They may offer what's called a forbearance, which is somewhat similar to a deferment on a student loan. A forbearance means that they'll allow you to go a period of time without making more mortgage payments. They may offer a repayment plan, which could result in, sometimes, a lowering of monthly payment, or allowing you to catch up if you're behind. The federally insured mortgages like the FHA mortgage should offer those types of repayment options. But again, you need to check with your lender and make sure that you communicate with them regularly about that.
Denise Keiser, thank you for being here.
