Tuesday, 23 June 2020

How To Manage Your Money In A Recession

In this article, we are going to be talking about how to properly manage your money during a recession. So I think it is important with everything that's going on right now for most middle-class families to understand exactly how to manage their money, and when I say middle-class, I mean, pretty much the 99%, so excluding all billionaires. With that being said, we are going to break down this article into three parts, the first is going to be, what you need to do if your income is stable, the second part is going to talk about what you need to do if your income is unstable or if you have been recently laid off, and, the third part, is going to ask a few questions to see if claiming or filing for unemployment is for you.

Let's get right into it 

1. Stable Income

Stay The Course

The first way to manage your money during a recession if your income is stable is to stay the course. The reason I say this is because so many people start to get emotional and irrational during a recession to where they start cashing out their retirement accounts and their 401ks and all that stuff. If you already have a plan in place such as a budget or if you are already paying yourself in different buckets which I recommend, so like having a travel fund, a house fund, an emergency fund, a savings fund, etc... you need to stay the course and keep doing what you are doing do not panic.

Stay Current With Bills

You do not want to be some of these people that are taking advantage of all these different programs that are not really designed to help you in the long run. like, pausing your mortgage payments, and doing things like that. Just handle business as usual and stay current with your current bills.

Use Stimulus

If you qualify for that $1,200 stimulus check or if you are even getting it at a reduced rate, you need to use this and pay off debt or invest  

Do Not Cash Out Your Retirement

Do not cash out your retirement as I mentioned earlier, a lot of people panic when they see their 401K go down 20 30% think it is going to go down way more, obviously, there's a chance of that happening but most people see those gains recouped as we have seen over the past couple of weeks.

Pay Your Mortgage

Stay current, do not take those deferral programs unless you have to, because you are still producing that stable income

2. Not Stable Income Or Laid Off

Pay The Minimum On All Your Obligations If Possible

Unfortunately, if you have been laid off or if you are a server or a bartender or a salesperson and your income is not stable right now, that is what you need to do and focus. 
 Focus On Your Necessities

What do I mean by necessities, these are the things that you literally need to live, so I am talking about food, utilities, house, and reliable transportation. That way you can get to work or job interviews or whatever you need that car for. 

Cut Out Unnecessary Spending

My girlfriend signed up for Hulu because she wanted to watch the Kardashians and I literally feel like I'm losing IQ points and brain cells the more that show is on, but couple months later we don't even use Hulu. So cut out stupid subscriptions that you do not need because every little bit counts.

Do not Take Out Debt

What do I mean by that, say, for example, your house is paid off, you do not want to take out a HELOC or a home equity line of credit, you do not want to take out a payday loan, you don't want to take out a loan on your 401k if you don't have to, because you are just digging yourself deeper in the hole. You should wait to cash out your 401k only if you are facing like foreclosure or eviction if you are literally getting kicked out. Do not touch the 401k unless you absolutely have to, and don't take out more unnecessary debt.

3. Unemployment

$600 per week From Cares

The reason I included this section right now is that there's a lot going on with the stimulus package and the cares Act. What's happening with the cares act is that they are attacking an additional $600 per week on top of what your state would give you,. Typically unemployment checks are given every week and they are range anywhere from like a $100 to $400 at least in the state that I live in depending on the previous income that you can verify. If you are making like $400 a week from the unemployment check plus the $600 from the government, I mean, that's a $1,000 a week. So there's very little incentive to look for a part-time job or go back to work until at least this blows over, so keep that in mind.

keep look Or Develop Skills

It is almost a no-brainer to take it, but it could lead to bad habits which is why the next bullet point is to keep looking or develop skills. You do not want to use this to start playing video games and watching Netflix all day and just collecting that $600 plus whatever your state is giving you unemployment. You want to keep looking for jobs if possible and you also want to develop skills. There's a bunch of different online academies even during quarantine you can still be developing those skills.

Do Not File For Unemployment If You Can Bring In 50% Net Of What Your Income Was Before The Layoff

If you are making let's just say a $1,000 a week and you can find a part-time job or another gig making $600 a week that's sixty percent, so you should not file for unemployment. However, you may want to consider that extra $600 a week from the government 

Hope you got some value from this 

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