How to make ends meet before Covid relief arrives

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Volunteers from the Forgotten Harvest Food Bank during a pre-Christmas mobile pantry distribution in Warren, Michigan on December 21, 2020.

Émilie Elconin | Reuters

President Donald Trump signed the $ 900 billion coronavirus relief bill on Sunday, consolidating another round of aid to Americans.

Yet millions of families see a benefit gap that could stretch for weeks.

On Saturday, two key unemployment programs supporting 14 million Americans expired. Even though the latest bill will extend the programs, plus an additional $ 300 per week for the unemployed, officials are unsure when the programs will resume and experts have estimated it could take three to six weeks.

This leaves people with a long period of no income and few options for relief 10 months after the start of the pandemic. Additionally, another round of $ 600 stimulus checks will be released later than originally planned.

“Like a lot of people in America, I don’t really understand the purpose of this delay,” said Leigh Phillips, CEO of SaverLife, a nonprofit focused on financial security. “It was completely unnecessary and shows a complete lack of understanding of the desperation that millions of American families are facing right now.”

Negotiate or borrow

If you’re likely to see an income gap, one thing you can do is be proactive and call anyone you owe money to and let them know about your situation, said Lee Baker, Certified Financial Planner and Owner of Apex Financial Services, based in Atlanta.

“It’s no secret what’s going on,” he said, adding that many institutions have been flexible with people given the circumstances of the year.

Borrowing money from family or friends can also be an option. About 2 in 5 adults have helped their family or friends during the Covid-19 outbreak, according to an October survey by the National Endowment for Financial Education. About 14% provided one-time monetary support and 13% donate money on a regular basis.

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“I encourage anyone who is going to do this to be careful, to understand the family dynamic and maybe take the step to formalize it,” Baker said. It could be as simple as writing down the loan amount and your commitment to repay it, he said.

According to CFP Louis Barajas, CFP Louis Barajas, partner of MGO Wealth Advisors, based in Newport Beach, Calif., You can use a credit card for your purchases or request a cash advance if you absolutely need the cash.

“You don’t use it to buy Christmas presents,” Barajas said. “You use it to eat and do whatever is necessary.”

One thing Barajas said to avoid if possible is any high interest debt like payday loans.

Tap a retirement account

If you have a retirement account such as a 401 (k) and are under the age of 59 and a half, you can use it through a CARES law-free penalty-free distribution, but time is running out because it doesn’t. was not extended in the latest stimulus package.

Those hoping to withdraw from such accounts have until market close on December 30 to obtain the appropriate documents from their provider for such distribution.

Depending on plan requirements and the investments held in the account, there may not be enough time to take advantage of this option, according to Eliza Badeau, vice president of thought leadership at Fidelity.

If you are over 70 and a half and did not withdraw the required minimum distribution from your retirement account earlier in the year due to the CARES Act rules that removed penalties, you can take it. now, said Barajas. He added that money could be loaned to younger family members in need.

People are already at the end of their financial rope.

Leigh phillips

CEO, SaverLife

Seeking help beyond money

Granted, these options are not ideal, as they might not be available to everyone who needs help and in some cases could further hurt a family’s finances by going into debt or straining the odds. credit.

“People are already at the end of their financial rope,” Phillips said. “We need to solve this problem for the families as quickly as possible.”

In the meantime, the $ 600 stimulus checks should extend the lifeline a bit for those waiting for unemployment benefits to resume.

People should also make sure they know about any programs they might be eligible for so that they can take advantage of them, Phillips said. This includes food benefits such as the supplementary nutritional assistance program, the moratorium on evictions which helps with housing or the postponement of student loans for some.

People can also look for resources in their community that can help them with things like groceries, rent and other needs, she said.

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CHECK: Suze Orman: Don’t Pay Off Your Debts With A Second Stimulus Check – Here Is Your ‘First Priority’ Via Grow with Acorns + CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Tassels.

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