With the economy officially in a recession, millions of Americans still receiving unemployment benefits and some states pausing their reopening plans amid spikes in the number of coronavirus cases, it’s little wonder that some lawmakers are calling for a second round of stimulus checks.
While it’s been primarily Democrats pushing the idea — the stalled HEROES Act calls for distributing up to a maximum of $6,000 per household — President Trump recently voiced his support for another round of funding. “We will be doing another stimulus package. It’ll be very good. It’ll be very generous,” Trump said in an interview last week.
Yet even if a second round of stimulus checks is approved, it likely won’t be passed until the end of July. Plus, for some Americans, the amount won’t cover all of their expenses if they’re unemployed.
Rather than count on a second round of stimulus to make your budget work, here are five steps you can take now to help pay your bills and get on firmer financial ground, according to money experts.
1. Determine what you can live without
If money is tight right now, start by figuring out which expenses you can cut, at least temporarily.
Over the past few months, many Americans have unintentionally spent less because they have not been able dine out or shop normally. Those changes can make it easier to analyze what is essential and nonessential: Take a look at what you purchased in March and April because that’s when you were most likely to have been spending only on the essentials. From there, break down which purchases were critical and which were less so, says Alexandria Cole-Davis, a financial planner with Maryland-based Facet Wealth.
Another way to think about it is to create a “noodle budget,” which is the lowest budget you can get away with, says Tiffany Aliche, personal finance expert and founder of The Budgetnista. To calculate this, imagine you have to eat only Ramen noodles and pay for the barest basics such as rent and utilities, Aliche says. What is the lowest possible amount that you can spend to live on each month? That number is your noodle budget.
For those who don’t need to cut back quite so drastically, evaluate what you spend on dining, food and entertainment, as well as recurring expenses like gym memberships, streaming services and monthly subscriptions for food, clothing and beauty products, says Evelyn Zohlen, a certified financial planner and founder of California-based Inspired Financial.
Once you have a good estimate of your spending, decide what’s essential and what can you live without until you’re back on your feet financially.
2. Optimize how you’re spending money
It’s probably a good time to look at your bills and figure out if you’re overspending on anything. Most people set up services such as as cable or Internet when they move and then go years without analyzing the bills. But it doesn’t hurt to check in and see if there are lower-priced options.
Personal finance coach Ramit Sethi says there are five types of bills that you probably pay on a regular basis that you should attempt to lower: cell phone, cable, credit card, student loans and housing. Many of these companies, as well as your utility and car insurance provider, may have formal financial assistance programs available at the moment. But even if they don’t, it’s worth giving these providers a call to try and negotiate down your current payment or delay payment until a later date.
Research what assistance may be available to you and if there’s any information or paperwork you need to gather ahead of time. Plus, take a look at your payment history — if you’ve had on-time payments for years, that’s worth mentioning when you call up these businesses.
You should also look at the alternatives available to you. Are there better cable bundles for new customers? Or credit cards with lower introductory APRs or 0% APR periods? If you currently have an unlimited plan with Verizon or AT&T, for example, consider switching to a budget carrier such as Visible or Cricket if your phone is paid off. Both companies, which run on Verizon and AT&T networks, offer plans that could save you as much as half of your current cell phone bill.
And take time to review your home, car and/or renters insurance. It might not be a fun task, but it could provide you with an opportunity to “squeeze a little more money out of the budget,” Zohlen says.
While it’s important to make sure that your coverage and liability limits are appropriate for your current situation, it’s also good to critically look at your deductible. If you have expensive homeowners insurance with a low deductible, ask yourself how often you make a claim on the policy. Probably not that often, Zohlen says. It could make sense to make some changes.
3. Prioritize your bills
Once you’ve cut back your spending and lowered your bills as much as you can, prioritize where the money you do have is going, Aliche says. To figure out which bills and expenses you need to pay first and which you can delay, Aliche recommends asking yourself two questions: If I don’t make this payment, will I be unhealthy? If I don’t make this payment, will I be unsafe?
If the answer is yes to either of those, pay that bill as best as you can. And again, if you haven’t already, look into the many assistance and payment deferment programs that utility companies, cell phone providers, lenders and landlords may be offering.
“Lean into that help,” Aliche says. It doesn’t make sense to put all of your savings or your unemployment check toward your mortgage if you have a federally-backed loan that you can defer payment on for six months without racking up fees or interest.
4. Find ways to earn more
It may sound odd with so many Americans currently unemployed, but there are still creative (and straightforward) ways to earn money right now, even if you’ve been laid off because of the pandemic, Sethi says.
For some, it may be starting an online business, or perhaps taking on work in an industry that hasn’t been as impacted by the coronavirus shutdowns. It’s also worth noting that there are several robust federal and state programs currently in place to help Americans get back on their feet financially.
But you don’t have to be an entrepreneur to earn some extra cash. Many shipping providers, grocery stores, food delivery apps and even retailers are hiring right now. Part-time work could help you bridge the financial gap while you search for a new job in your field or a related industry.
There are even some types of remote, full-time jobs such as recruiters, sales account executives, customer service representatives and computer support specialists that are seeing a surge in openings, according to online jobs site ZipRecruiter.
5. Put any extra money away
Unsurprisingly, experts recommend to save what you can. All of the money you’ve managed to cut out of your budget should go to pay essential bills or into savings. “Now, more than ever, having emergency savings is critical,” Aliche says.
Ideally, you should have six months worth of living expenses saved up. While that may sound like a big number, you can start small and gradually build up a savings cushion to help you weather life’s unexpected costs.
Make it as easy as possible: Set up a regular, automatic transfer from your checking account to a savings account, preferably a high-yield option that will pay you a slightly better interest rate than your typical savings account.
“If you have a little bit of excess cash, you still want to be mindful that you’re using that as savings because we don’t know what’s going to happen next,” Cole-Davis says.