6 options if the COVID-19 pandemic negatively impacted your finances
Have you been negatively impacted by the coronavirus pandemic economic shutdowns? Whether you’ve lost your business, your job, or have just seen your income reduced, it’s going to be a while before any real economic recovery occurs.
In the meantime, here are some practical solutions that can help you survive a bad financial situation.
1. Refinance your mortgage
Regardless of where you live, interest rates have been dropped to all-time lows. While the U.S. is seeing record low rates, Australia’s home loan rates are impressive. Now is definitely a good time to refinance if you could use a break on your monthly payments.
By refinancing your mortgage, you could save several hundred dollars each month. If having an extra $300 to $400 in your pocket each month would be a significant help in your situation, you have every reason to contact lenders and start comparing rates.
If refinancing your mortgage has been on your to-do list for a while, bump it to the top and start the process today.
2. Apply for loan forbearance
If you have a government-backed mortgage through FHA, VA, or USDA, you can apply for forbearance through June 30, 2021. If your mortgage is through Fannie Mae or Freddie Mac, there is no application deadline.
Here’s how forbearance works:
- Your lender will either pause or reduce your mortgage payments for a short period of time
- You’ll still owe your full debt and will be required to repay missed or partial payments
The CARES Act allows anyone experiencing financial hardship because of the coronavirus to suspend their mortgage payments temporarily.
If you’re struggling financially, but you can still make your mortgage payments, don’t apply for forbearance. All it will do is create a pile of debt you’ll need to pay back later.
3. Apply for loan deferment
If you have a non-government backed loan, you might be able to get a deferment. Call your lender to find out if they’re offering any deferments or forbearance options.
4. Rent out your spare bedroom
If you’re okay with sharing your home and you have a spare room to rent out, take on a housemate or two.
Many people who have lost their homes are looking for an affordable place to live. While they may not have been able to pay their monthly mortgage, many have enough income to pay the cost of renting a room.
Taking on tenants will give you extra money to pay the rent. However, that income is technically reportable to the IRS. One way around having to pay taxes on their rent is to add your tenants to the lease. When your housemate’s rent is due directly to the main landlord or homeowner, it can’t be considered your income.
5. Apply for government programs
Governments across the world are launching financial aid programs to help people adversely affected by the coronavirus. These programs aren’t perfect, but they will provide some relief. For example, the United States has passed three separate stimulus bills with the latest payment being $1400.
Last year, Australia announced $38 billion in coronavirus relief funds. Small businesses and non-profit organizations are eligible to receive cash subsidies up to $100,000 AUD, unemployment payments are being doubled, and anyone on a pension will receive $750 AUD. Additionally, Australia has made retirement funds available early to workers who have lost a minimum of 20% of their income.
It seems like Australia has more government-sponsored COVID-19 relief programs than any other country. Here’s a PDF file containing 21 pages of government assistance programs Australian citizens can apply to receive.
6. Start a business
You don’t need a lot of money to start a business. In fact, you can start a business without spending any money. For example, you could start a t-shirt shop online on Zazzle, Spreadshirt, or CafePress without spending a dime.
While customized clothing is always an option, consider providing a necessary service to other people during these hard times. Not everyone will have the disposable income to buy a bunch of clothing. However, they will be spending their money on necessities.
Here are some ideas:
- Make custom facemasks
- Split and sell kindling
- Bathe the neighborhood dogs
- Repaint curb address markers for $10
- Offer affordable yardwork services
If you’re struggling financially, you must get creative. If you can’t find a job, create a way to earn money. People are always willing to pay for the services they need. In hard times, if you can undercut the professionals, you have the potential to earn a regular income.