Investing Latina shares her tips for managing financial uncertainty amidst COVID-19
We’re in a scary and stressful time right now as we collectively face the fear and uncertainty of the COVID-19 pandemic. Countless businesses have been forced to shutter due to shelter-in-place safety measures, with hospitality and leisure industry workers among some of the hardest hit, according to Reuters. Now, almost two months into the crisis, we’re seeing the trickle effect of economic shutdown, with over 26 million jobs lost, and many having their hours at work slashed.
While the $1200 stimulus check some Americans received as part of the government’s relief package will lessen the financial burden to a degree, it’s really just a band-aid solution for those who have been laid off or furloughed. If you’re facing financial uncertainty right now, and wondering how you’ll be able to cover bills and rent in the coming months, you’re not alone.
I recently spoke with Jully-Alma Tavaras, aka InvestingLatina, to discuss the matter at hand. Jully’s passion for personal finance inspired her to create InvestinaLatina to open the door to conversations about money with other Latinas and BIPOC. She uses her platforms on Instagram and YouTube to inspire and educate women to become financially powerful. Recently, she’s been providing her followers with regular updates and advice during the COVID-19 pandemic. We discussed navigating unemployment, creating a “survival number,” and her tips for approaching tough conversations about money. Check them out below.
For those who have lost income or have been laid off, what is the most immediate action you recommend they take to safeguard themselves financially?
If you’ve been laid off or lost your income, the first thing you have to do is check your eligibility for unemployment benefits. Unemployment is a type of insurance – that the company you worked for paid to the state for situations like this one, where you have lost employment through no fault of your own. You want to do everything you can get support through your state so that you have some sort of inflowing income.
Due to COVID-19, part-time and gig workers may also be eligible for unemployment for the first time ever. Start by going to the department of labor (DOL.GOV) – or –
(https://www.dol.gov/general/topic/unemployment-insurance), where you can then also search for your state’s unemployment website, your eligibility, and how to apply.
What expenses do you think we need to be prioritizing right now?
The basic needs are what you should focus on. Considering we are going through a global health crisis, prioritize your health insurance payments, your rent, your food. I highly encourage you, if you do not currently have health insurance, to look into your state’s health insurance marketplace. Visit healthcare.gov, where you can enter your zip code, and be directed to your options.
Food and shelter are the basics, so paying rent and buying the food you need is important. You do not need to panic-buy; only buy what you need, as you need it.
You talk about having a “survival number” when figuring out your personal budget. Can you tell me more about this and how we calculate our own survival number?
Your survival number is the very bare minimum dollar amount that you need to live. I actually like to think of it as a challenge, sort of like survival of the fittest. Ask yourself: “What is my survival number – how can I simplify my budget and just focus on my primal needs as a human? It can be a challenge because it might mean you have to cut a lot of the fun stuff. For example, the only entertainment in my personal survival budget is Spotify, but I am constantly looking for free concerts and events in my city. That’s how I find a good balance.
You can calculate your survival budget by listing all of your current monthly expenses, then slowly eliminating what isn’t absolutely necessary. It takes some practice, but it allows you to take control of where your money is going. You can readjust this number as your needs change, but it’s good to know what your basic survival number is for situations like this one where there are so many things out of your control.
For those who have bills they might not be able to pay this month, (phone, internet, utilities, etc), is there anything they can do?
Now is the time to reach out for a hand. Get in touch with your utility companies. Your first question should be: “Can you share what relief you are offering due to COVID-19/coronavirus”? Once they share any offers and apply them to your account, ask if you can push back the due date if that would help you. Many banks have offered to push back due dates by two or three months.
Rent is a big concern for many, is there anything that could be done if someone is unable to make rent?
If perhaps you haven’t been able to come up with all of the rent money, but you have some of the amount, you can try to make an arrangement with your landlord. For example, you can suggest paying 50% of your rent now, and then plan to add additional payments to your rent in the next 3-4 months to get caught up. This will show them that you intend to pay, so they may be more willing to work with you.
If you’re in a really tough position where you cannot pay at all, start to familiarize yourself with your rights as a renter according to your state’s laws. Most states have suspended evictions, so this means that you cannot be evicted, in some cases for up to 90 days. This will give you some time and flexibility to get unemployment or some stimulus relief until you can get back to work.
In general, try your best to not to fall too far behind and later be evicted. This can have other long-term consequences like a lower credit score or negative rental history.
Let’s talk about other expenses, like credit card debt. Should we just focus on paying the minimum payment? What about if we’re unable to pay the minimum payment?
Credit card debt is something I would not give huge priority to. If you have cash coming in and are able to make minimum payments, make them! If you do not have income coming in, be very strategic with the money that you do have. Due to the pandemic, credit card companies are waiving interest charges and late fees if you missed a payment – but you have to ask! This will reduce how much you owe, so it’s a #smallfinancialwin. So if you repeat this with all of your accounts, you can potentially save hundreds of dollars!
Another option is to look into their hardship program. This means that they can defer payments, reduce or stop interest charges, and create a payment plan. This can be three months or in some cases, up to one year. You may find some of this information in your cardmember agreement, but you can also just call to ask what you have the access to. The key is to communicate with them so that they don’t report non-payment to the credit bureaus, which will impact your credit history negatively.
How about student loans?
Student loans were one of the first things that were nationally addressed – student loans interest and payments have been put on administrative forbearance until September 30, 2020. What does this mean for you? You can do one of two things: You can hold off on payments and use the money for more urgent necessities, or you can continue making payments, which will all be applied to reducing the principal amount owed.
In almost all cases, this forbearance has been done automatically since this has been mandated by the CARES Act. However, you should still be diligent and double check with your student loan provider to confirm.
On your channel, you mentioned two ways to use your stimulus check effectively: “reduce liabilities” or “increase cash or assets”. Can you tell us what this means and some of the ways we could do this?
As millions of Americans have received or are receiving their stimulus checks, they start to wonder what the best thing to do is. And although everyone has a unique financial position, you can think about it in very simple terms: Reduce liabilities such as paying your utilities, bills, car payment, or you can increase cash and assets such as start your emergency fund, use it to learn a new skill, or for some people, investing in the stock market. You can choose to split it 50/50 where you are reducing some liabilities and increasing some assets. There is almost no wrong way to use the check; just make sure that you are being intentional and that you are putting yourself in a better financial position. If you’re holding on to your check and want some inspiration, I asked 15 women what they were using their stimulus check for and what their investment goals are. Here is what they had to say: https://youtu.be/7DnSyMf8KjY
Having conversations with significant others or family about finances can be intimidating, but with so many facing hardship right now, in some situations, it could be necessary. Do you have any tips for approaching these difficult conversations?
Approach money talks with family and significant others with an open mind and a lot of compassion. We have all made money decisions that we may or may not be proud of, so try your best to not come from a place of judgement but rather a place of love and understanding. It’s going to be tough and it will be stressful, especially if there is significant hardship or if perhaps you are faced with a death in the family due to the pandemic. My advice is to have the conversations early in the morning after a good breakfast. Don’t allow fatigue of hunger to add to the temor of approaching these topics. Take your time, and if you cannot address it all in one conversation, that’s fine. Revisit and do it when you’re ready.
I love that you encourage your followers to chase “small financial wins” like paying off credit cards. What are some other “small wins” we could focus on right now?
A small financial win a day is a way to stay money-positive and maintain a healthy attitude when it comes to your financial situation. There will be times, perhaps like right now when we’re in the middle of a pandemic, when things will be tough! But, we have to be diligent about managing our money and we have to find inspiration within ourselves to overcome. So even if you have a mountain of debt, like I once did, you can call every three months to ask your credit card company: “Hey, I’ve been a loyal customer; can I get my interest rate reduced?”. These types of small wins add up, they re-energize you, and keep you motivated to reach your next money milestone.
My favorite small financial wins right now have to do with being home since that’s where many of us are spending most of our time. Here are some ideas to save money while at home:
- Use a powerstrip for each room and turn it off when you’re not in the room and at night
- Use washers/dryers during off-peak hours, like after midnight
- Open the blinds so you can use less artificial light
- Drink more water; it helps you control the urge to drink sugary and expensive drinks
- When shopping online, remember to use cashback sites like Rakuten.com
If you are an essential worker, here are some ways you can score a small financial win:
- Make a delicious breakfast at home, which can save you $8-$10
- Pack snacks to keep you fuller in between meals
- Look for lunch specials or free meals that may be available to you
- Always ask if they offer essential worker discounts
Finally, do you have any other advice you’d like to share?
My advice to everyone right now is: Increase your savings and do not be ashamed to ask for help. This is something that the entire world is dealing with at the moment, so do your best to maintain a positive outlook.The economy will recover, we will recover. Focus your energy on learning what your options are and managing your money in a way that works best for you. Financial literacy is the starting point that leads you to investing – and that’s how you become financially powerful!