The recent stock market losses put a dent in many Americans’ savings. Many people are worried about the security of their jobs and health care, and the amount they have to pay for big-ticket items like housing and education.
With the coronavirus pandemic causing an economic shutdown, unemployment across the US has surged to over 20%. With numbers this high, people are concerned with how they will protect the money they do have and how they will cover expenses until things settle down. Below, Jason Kulpa, net worth expert and experienced serial entrepreneur, describes the effect of the coronavirus on US household net worth, and what proactive measures people can take.
If you are concerned with paying for your everyday expenses, the good news is the government has announced a one-time payment of stimulus checks to Americans as part of the CARES Act. Whether you have been laid off, are working reduced hours, or are still working amidst the crisis, you may qualify for up to $1200 as an individual or $2400 as a family. The amount is reduced or phased out altogether depending on your annual income.
Unemployment benefits have been increased as well. In addition to state benefits, individuals can receive an extra $600 a week for up to four months. The waiting period to apply has been eliminated and the eligibility period when you can depend on unemployment has increased from 26 to 39 weeks, as no one knows how long the economy could take to recover.
The tax filing deadline for 2019 has been extended from April 15th to July 15th this year. If you are in the position of potentially owing taxes to the government, this may benefit you as you have a few extra months to prepare for making that payment. If you are looking for additional deductions, the deadlines for IRA and HSA contributions have also been extended.
Most banks and lenders are offering skip payments on mortgages for anywhere from 30 days to 3 months. While the payments are just added to the back end of the mortgage, it may benefit your family if you are struggling to make payments at this time. With lending rates as low as they have been, other options to generate extra cash could be taking out a HELOC from the equity in your house or doing a cash-out refinance based on the appreciation of your home. Either way will allow you to turn the equity from your house into an extra source of cash during this time.
Student Loan Payments
The CARES Act includes a portion dedicated to student loans. Certain federal student loans owned by the US Department of Education are eligible for interest waivers and forbearance until September 30th, 2020. With this enactment, payments on these loans are not required until after September 30th. If your loan is not currently eligible, contact your loan provider as there may be other options to consolidate into an eligible loan or change your payment plan to an income-driven one.
Another provision from the CARES Act allows for a new exception to withdrawal funds from your 401(k) without penalty. The provision allows for the withdrawal without penalty if you and your family have suffered adverse financial consequences as a result directly with COVID-19. While most would suggest avoiding tapping into your retirement, this allows for you to do so in an emergency without being penalized.
About Jason Kulpa
Jason Kulpa is the Founder and former CEO of UE.co, San Diego’s Fastest Growing Business multi-year award winner, and a Certified Great Place to Work multi-year winner. Under Mr. Kulpa’s leadership, in 2018, his teams volunteered at over 24 events and worked side-by-side to improve the San Diego community. They hosted a gala dinner benefiting individuals with autism, cheered on Special Olympic athletes as they broke their records on the track, and brought school supplies and cold-weather gear to students impacted by homelessness.