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5 Financial Considerations in this COVID-19 Environment


Given the COVID-19 crisis that is impacting our country (and our families), I decided to share five things to consider as it relates to managing your personal finances in this environment. These considerations, along with the nine financial spring cleaning tips I am sharing on Intagram, should aid in keeping you afloat while navigating this pandemic. Stay safe my friends!


1. Take advantage of the new tax filing deadline to preserve liquidity

The Treasury Department and Internal Revenue Service announced on March 21 that the federal income tax filing due date is being automatically extended from April 15, 2020, to July 15, 2020. Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.


For those needing to preserve cash/liquidity, this extension offers a 90-day grace period to help get your affairs in order.


More details:

  • Taxpayers can defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.

  • Individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension by filing Form 4868 through your tax professional, tax software or using the Free File link on IRS.gov. Businesses that need additional time must file Form 7004.

  • Bonus: For those looking to add padding to their monthly budget, you may qualify for the economic impact payment. Click here for the latest from the IRS on who qualifies for this stimulus and for how much.


2. Avoid unnecessary and fear-based spending

I was in the grocery store the other day and overheard a couple negotiating the purchase of grocery items they knew they did not want or need. The wife was following the “it’s better to have and not need, than to need and not have” logic. The husband was hellbent on getting out of the grocery store and his frustration was causing him to throw items into the cart in a haste.


Don’t be guided by fear, anxiety or other negative emotions during this time. Avoiding unnecessary spending allows you to pad your savings for items that you actually need.


If you have enough food to last you for a week or two, you will be fine. NEWS FLASH: Grocery stores are still open. You can also make use of non-perishable items if/when necessary. While non-perishables aren't the healthiest options, they sometimes have to do, especially if/when there is a food shortage.


3. INDIVIDUALS: Use emergency reserves to stay afloat vs. accumulating additional debt. SMALL BUSINESSES: Check out available SBA resources.

You’ve saved for an emergency and, guess what, we are facing one. Use your 3-6 months of emergency reserves to keep you afloat during this pandemic vs. racking up more credit card or loan debt. This consideration does not apply to those accessing small business loans for payroll or operational support, but rather individuals working to manage their monthly household expenses during this period.


For small businesses, check out available SBA resources and use these funds wisely! Bonus: the interest on most business loans is tax deductible and, if you qualify for one of the SBA Economic Injury Disaster Loans, you'll have up to one year to make the first payment. For Paycheck Assistance Program loans, you can defer payment for up to six months.


If you don’t have an emergency fund, now is the perfect time to begin creating one. Be sure to check out my nine tips for financial spring cleaning, one of which is how to build an emergency savings. If you need more immediate help, don’t hesitate to reach out.


In light of COVID-19, we’re allowing folks to try our R.E.A.L.I.S.T.I.C Budget Method absolutely free. This tool will help you save anywhere from $200 - $800 and immediately begin funding your emergency savings pool. Email us to inquire about trying our method.


PRO TIP: For my savvy money managers, your life insurance policy’s surrender value is a pot of resources that can be tapped in absolute emergencies. I’m not sure of your policy type however, I have an indexed policy that is tied to the market. I can make a withdrawal penalty, repayment and interest free. This withdrawal won’t surrender the policy however, it will decrease the face value ever so slightly. The beauty…the portion that is tied to the market will continue to grow, particularly when the market improves. Call your policy provider and discuss your options.


4. Call your creditors, utility companies, etc. to request support

If there were ever a time to negotiate payment plans or to ask for grace/forgiveness on late or missed payments, now is it. Most creditors are willing to work with those impacted by the pandemic and have provisions in place to support you during this difficult time.


If you don't already have one, make a list of who you owe on a monthly basis, all of your account numbers and your monthly obligations. This is a great starting point and will help you prioritize who to call first.

5. Seek financial and tax advice to come out on top

For those that seek expert counsel, now is a good time to schedule a call with your financial advisor and CPA. Good investment and tax advice is invaluable during this period. Before making hasty decisions like withdrawals or loans from your retirement plan(s), speak with your advisor or fund manager. While tapping into your retirement plan isn't a good move, there are opportunities for stock purchases (and the like) that could place you in a better position than you were before the pandemic.


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