Be CAREFUL of The Cares Act

Welcome to April! I’m excited because it is the 1st day Financial Awareness month. Considering the global crisis we are experiencing, I will be sharing a weekly newsletter to address the personal economic outlook, inspiration, ideas, and questions to help YOU, my community.  Feel free to reply to this email with questions or topics you want to hear more about during this time.  I’m here for you.

Today, let’s begin with the Cares Act that congress just passed to help us all during this financially challenging time. I want to give you resources and information but also help you make wise decisions.

The Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act” provides tons of relief to millions of Americans.  This is an encouraging bi-partisan step in a positive direction. I want you to take advantage the benefits this act provides without derailing your plan long-term.  Here is an article that explains it all.  This article details where the $2 Trillion dollars in aid will be distributed.  Read on to find out what you should be careful of as you decide what to take advantage of.

1.      Many people are asking me what to do with the stimulus check that will arrive later this month.  Don’t spend your stimulus check on anything other than high priorities like food, shelter, medical needs or utilities.  If these basic needs are covered then hold onto this money until life returns to normal.  Since we haven’t experienced anything like this, we have no idea what to expect in the short-term.  Treat this like an emergency fund and prepare to be quarantined until the end of May.  Use this stimulus check for emergencies because that is exactly what COVID-19 is… an emergency.

2.      Don’t cash in your 401k unless your home is in jeopardy of foreclosure.  The Cares Act has temporarily lifted the 10% penalty that investors face if they want to cash in retirement dollars. This is a drastic measure. Find ways to preserve your income through budgeting, applying for unemployment, or even getting a temporary gig for the time being (Kroger is hiring!). 68% of retired Americans wish they had saved more money when they could. If you take that money out now you are likely to regret that decision later. Plus, you are still taxed on those funds and you will feel that next year when you file your 2020 taxes. Consider reducing the amount you invest temporarily instead of pulling funds out.

3.      More Americans will receive assistance during this time.  Unemployment benefits are extended beyond the state level so you may qualify for more money weekly if your income has been impacted and benefits are 13 weeks longer.  Self-employed individuals can also qualify for unemployment. Small businesses could qualify for Paycheck Protection Loans that may be forgiven. Be careful to follow the guidelines so that you don’t owe it back though. And don’t apply for loans unnecessarily that will need to be paid back. There are so many other options to consider for yourself and your employees.  Check out this article for specific small business relief opportunities.

4.      There is no reason to go further into credit card debt.  You may be able to re-evaluate your budget and make it work for the next few months. Review the following budget categories for your household before using credit or adding debt.

• Since you are quarantined you don’t need much gas.

• Many restaurants are closed so dining out is lower.

• You may be using vacation weeks for childcare if your kids aren’t going.

• You can call your mortgage company to request delayed payments.

• At the state level, you may be able to halt utility payments without penalty.

• You don’t need to make federal student loan payments for 6 months and there is no interest accrual. Learn more here…

These are the major components of your budget.  All that is left is food.  Take care of the basics without using debt and you will thank yourself later.

Tomorrow 4/2 at 8pm EST I am holding a zoom call to discuss how to recover successfully from this moment in time.  Be sure to register here because if you can’t make it live then you will be able to get the recording.  I look forward to seeing you there!

Register in advance for this meeting by clicking this link.

After registering, you will receive a confirmation email containing information about joining the meeting.