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  • Hey guysit's day 25 of quarantining in our house.

  • Like you, we're binge-watching Tiger King, stress baking, and (less fun) experiencing

  • a reduction in our income.

  • We realize we're in an incredibly fortunate position; being able to ride it out without

  • making significant sacrifices, but that is not the case for most.

  • As we've mentioned before, 40% of Americans can't pay for a $400 emergency without credit.

  • Even if you're not facing a corona-induced-cash-crisis YET, that doesn't mean you're out of the

  • woods.

  • The economic fallout from this disaster IS going to have an effect on your life, no matter

  • what industry you're in.

  • Unfortunately, like this virus, anxiety is also contagious.

  • So it's only natural that a lot of us are asking ourselves the same question: How do

  • I survive a financial storm?

  • Your first step needs to be to create an Emergency Budget.

  • Yep.

  • If you haven't yet climbed on board the Two Cents budget train, 2020 is the perfect

  • time to start.

  • First rule of emergency budgeting is it must be written or typed out -- not in your head.

  • So find a spreadsheet or sign up for a budgeting software.

  • Some are completely free.

  • Second step is to gather data from the past.

  • That way you're working with real numbers and not the amount you THINK you spend.

  • Start by looking at the last 2 months worth of transactions and make a list of everything

  • you spend money on.

  • This might take a little time, but hey, for a lot of us, time seems more plentiful than

  • ever.

  • Start by grouping the essential expenses at the top.

  • Housing, utilities, basic groceries, transportation and medical needs.

  • Second, list debt payments, like student loans or credit card minimums.

  • Finally list all your discretionary expenses, like entertainment, meal delivery,

  • and subscriptions.

  • What you're looking at is your pre-crisis budget.

  • Now it's time to use that data to draft your emergency budget.

  • Your first draft should take on a “Scorched Earthfeel by cutting everything below

  • your minimum debt payments.

  • Spotify, wine, Postmates, even Netflix.

  • Feels pretty bleak, right?

  • Don't worry, we're not done.

  • Now it's time to create a second draft where you strategically pick discretionary items

  • to add back in.

  • This might be just one thing, like Netflix.

  • Or if your income took a less drastic hit, you can add back 3 or 4 things.

  • It might come as a surprise, but holding onto a couple tiny splurge items might actually

  • help you more in the long run than cutting them all completely.One survey showed over

  • half of americans owned up to impulsively shopping as a result of feelings of anxiety,

  • stress and depression and 83% of those stress spenders regret those purchases later.

  • For example, I find a lot of relief in being able to play a few online games.

  • So I'd rather maintain access to that outlet and cut out ordering in because I find cooking

  • less stressful.

  • You might have a different preference.

  • The point is that you need to give the pressure cooker a small but intentional release, that

  • way you're less likely to make a massive impulse buy later.

  • Now that most of your discretionary spending is paused, it's time to try and slim down

  • the expenses that make up the majority of your needs, your essentials.

  • And with almost 7 million applying for unemployment just last week, lenders and utility companies

  • are being especially lenient.

  • If you own a home with a mortgage and have had your income go down, reach out to your

  • mortgage company immediately to discuss options.

  • The two mortgage giants Fannie Mae and Freddie Mac are rolling out relief measures to help

  • millions of homeowners defer or re-work their loan payments.

  • Even institutions like Chase, Bank of America, and Wells Fargo all are coming out with their

  • own offerings.

  • And while landlords are less regulated than mortgage lenders, they also might be able

  • to extend you more time or be a little more flexible on terms, but again, you need to ask.

  • Your next round of calls should be to your utility companies & insurance providers.

  • Many are offering to give their customers leeway to skip or delay payments.

  • As you work your way down your list of bills, you'll finally get to your minimum loan

  • payments.

  • Thankfully, all federal student loan payments have been suspended by the recent stimulus

  • bill until september 30 and even private lenders are offering forbearance programs.

  • You should also reach out to your credit card companies and any other lenders on your list.

  • They're all joining theless people can pay usparty.

  • The one thing that most of these forms of relief have in common is that benefits are

  • not automatic.

  • You have to reach out and ask them for help.

  • Proactivity is the name of the game.

  • And even if they don't let you skip a payment, they might have the power to not let it affect

  • your credit score.

  • That alone would be worth the call.

  • And if you already have cash set aside, or are expecting some in the form of, say, a

  • stimulus check from Uncle Sam you should keep that on hand to cover your expenses your income

  • can't.

  • While it might be tempting to pay off debt or even invest with the recent stock-market

  • drop, cash is king in a crisis.

  • Even if your income is only somewhat hit, it's best use is to plump up that emergency

  • fund a bit more.

  • Just in case Murphy's law decides to show up.

  • And even with flexible payments and forbearance plans coming online, we see many folks considering

  • extreme measures.

  • Like taking on 5 figures of credit card debt, yanking from retirement or even ignoring bills

  • entirely.

  • Is there a time and a place to take these drastic steps?

  • Maybe.

  • But they should be an absolute last resort.

  • We definitely don't recommend taking out credit cards or loans if you have cash you

  • can access: that's exactly what it's for!

  • You truly need to be living thescorched earthlifestyle in earnest before resorting

  • to those tools.

  • And if you're in survival mode and debt is not an option, prioritize paying for your

  • basic food, utilities, and transportation you'd need to keep yourself employable.

  • If you still have leftover funds, move on to your housing costs, and minimum debt payments.

  • The main reason putting your utilities before your housing costs makes sense is that the

  • consequences set in more quickly than skipping a housing payment.

  • There's no way to sugar-coat it.

  • It's an especially scary time.

  • But it doesn't have to be an unmitigated disaster.

  • Don't allow panic or shame to take complete control.

  • You have the power to make a plan and reach out for help.

  • And that's our Two Cents

  • Thanks to our patrons for keeping Two Cents finanically healthy.

  • Click the link in the description to become a Two Cents patron.

Hey guysit's day 25 of quarantining in our house.

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