Loss of income can be devastating; tips offered to prioritize spending during pandemic and other difficult times
When you have had a loss of income, it can be devastating. Now you face some very difficult financial decisions when your paychecks stop coming and you do not have enough money to cover your family’s basic living expenses.
Spending habits must change when income is reduced, and prioritizing needs vs. wants is going to be crucial. Remember to include your family in the decision-making process to determine which expenses are most important. It will take everyone’s cooperation in order to carry out the plans.
The first step is to figure out what your current income and monthly living expenses will be. The bills don’t stop coming; yet, you are still legally obligated to pay your debts.
Before skipping a bill or making a partial payment, start by getting a complete picture of all your expenses and bills owed, monthly payments, non-monthly expenses that only occur occasionally, and interest rate or fees for late payment.
Everyone’s situation is a bit different, but here are some tips for prioritizing spending according to how it will affect your family’s health and security the most.
— Housing: First, pay housing-related bills. Keep up the rent or mortgage payments if at all possible. Failure to pay these debts can lead to loss of shelter for you and your family.
— Basic living expenses: Maintain vital services such as utilities and phones. Contact your utility service companies to see if you can make the minimum payment necessary to avoid disconnection. Missing payments on basic utilities and other debt can result in penalties, foreclosure, shutoff notices, etc.
Consider reducing your food budget by adjusting what you purchase. For example, purchase low-cost protein sources such as beans, instead of meat. Set aside adequate money for groceries but be open to supplementing your food budget at local food banks.
— Transportation: Whether or not transportation is needed to travel to and from work or looking for a job, car loans and leases will still be due. Your creditor can repossess your vehicle without going through the courts first if you miss payments.
— Insurance: If you have lost your medical insurance, you can look for insurance options through the Affordable Care Act.
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