How to Budget with Less Money

If you’re one of the roughly 14 million Americans without work in the wake of the Covid-19 pandemic, you may be in for another unwelcome surprise: you’ll be getting less additional unemployment benefits.

And that means you’ll probably have to rethink how you manage your money.

Here’s what’s happened so far: In July, the extra $600 that unemployed workers got from the CARES Act expired. In its place, President Trump issued several executive orders,  potentially giving unemployed workers up to $400 depending on where they live. The federal government is providing an extra $300 per week through the Federal Emergency Management Agency (FEMA). States have to apply for the aid program and can tack on an extra $100 for each person. 

While payments are just going out in some states, there’s a lot of uncertainty about them. Although the executive orders extended additional benefits through December 6, 2020, experts have said that FEMA’s funding for the program is likely to run out within four to five weeks, leaving unemployed people in the lurch again. 

Meanwhile, Congress is still at odds over the next stimulus package. Democrats recently rejected a “skinny” rescue package approved by Senate Republicans for several hundred billion dollars, because it does not provide enough money. For their part, the Democratic-led House of Representatives passed a $3 trillion bill in May, which was rejected by Republicans. 

No matter what Congress decides, unemployment benefits are likely to remain lower than they were. So you may need to change the way you budget if you’re out of work. Stash has some suggestions to help you manage.

Negotiate your bills

This advice from March when the pandemic hit still stands. You might be struggling with your credit card bills, mortgage payments, auto loan payments, or other bills. Missing payments or making payments late can hurt your credit score, which can hold you back financially in the future. 

Reach out to lenders if you haven’t done so yet and see what they can do. You might be able to negotiate lower or waived fees or the due dates of your payments. If you aren’t able to negotiate with the first customer service representative you speak to, try calling back later. And make sure you know if that negotiation will affect your credit score and how.

You may have already come to some agreement with your landlord on rent. If your lease is up or coming to an end, see if you can find a cheaper rent and move or use that cheaper rent to argue for a lower rent at your current place. 

Tap into your savings

You have your savings for a reason. Hopefully, you have an emergency fund that contains enough funds to cover three to six months of expenses. If you do have an emergency fund, now may be the time to lean on that money if you don’t have that extra unemployment money coming in. It can be scary to rely on your savings but remember that you save to help you get by when something unexpected—like a pandemic—happens. 

Try not to pull from your retirement savings during the time since you can incur penalties for withdrawing from those accounts before you’re legally allowed to do so. 

Take on debt (smartly) if you need to 

No one wants to take on more debt than they normally would. But the current economic situation might push you to take on more debt than you otherwise would. There are some ways that you may be able to do so in a financially wise way. 

You should check if your current credit card provider has any flexibility when it comes to your interest rate on your credit card bill. The average annual percentage rate (APR) for a credit card as of May, 2020 was 14.52%. The APR is the rate at which your credit card company charges you for borrowing money. If you pay off your credit card bill every month, you might not have to worry much about your APR. But if you need to temporarily keep a balance on your card because of Covid-19, you’ll want to get a card with a low APR. 

You can even find credit cards with APRs as low as 0%. As with all credit cards, read all the fine print and ask about any hidden fees before you sign up for the card. And keep in mind that you might need to have a certain credit score to get access to those cards.

Set up a plan for paying off your debt once you’re able to do so. Include debt repayment in your budget where you can and prioritize paying off that extra debt as soon as possible. Don’t let debt grow for too long since it can have a negative impact on your credit score. (If you feel overwhelmed by your debt, consider using the avalanche method or the snowball method to attack it.)

Accept help where you’re able to

You may be hesitant to accept donations or charity. But if you’re out of work right now, you’re not alone. A lot of people need extra help. 

Whether schools in your area are open or not, you and your family may have access to free meals through the U.S. Department of Agriculture. You should also consider going to a local food pantry for your grocery needs. Feeding America has a tool that can help you find a food bank in your area.

You could also be eligible to receive donations from funds that have been set up for certain industries. For example, the Restaurant Employee Relief Fund (RERF) has approved one-time payments of $500 to more than 43,000 restaurant workers in the U.S. Look around online to see if you qualify for grant payments.

Navigating you through this time

Stash will continue to update you with information on where stimulus legislation stands and how unemployment benefits change during the pandemic. Make sure to also check back with Stash’s guide to financial help during Covid-19, which includes resources to help you plan and budget during the pandemic.