'There's Only One Bill To Prioritize -- Everything Else Is Negotiable': CBS Analyst Explains How To Navigate Outstanding Balances On Limited Funds
(CBSNewYork) -- Unemployment continues to rise, even as parts of the country take steps toward reopening. April's unemployment rate more than tripled to 14.7 percent, the worst rise on record. The first week of May saw almost 3 million more new unemployment claims, bringing the coronavirus pandemic total to 36 million. The actual effect on the job market is likely far worse than the reported statistics.
Losing a job, and the income that comes with it, can quickly change the financial standing of a household. Bills don't stop coming just because the paychecks do. And many households don't have the financial cushion to weather a job loss, let alone a job loss during a financial crisis brought on by a global pandemic.
If you're in this unfortunate situation -- and so many Americans are -- "there's really only one bill to prioritize," says Jill Schlesinger, certified financial planner and business analyst for CBS News, "and it's food, food, food. And everything else is negotiable."
This is the time to go back to basics. "Figure out where your money is spent normally and also now during the pandemic," Schlesinger says. "Of course, food is your top priority. Shelter is a priority -- it could be your rent, it could be your mortgage. It could be your health insurance. It could be your utilities. It could be your internet service provider. It could be your life insurance. All of those bills need to be prioritized."
It may not be possible to pay everything with limited funds. And, frankly, some things matter more than others anyway. How does one go about ranking what's most important? "There is a great tool that is available from the Consumer Financial Protection Bureau (CFPB)," Schlesinger points out. "It helps people list all the things they spend money on and then go back and say 'what is my priority.'"
This CFPB resource isn't meant to replace the advice of a financial professional. But it can help those in dire financial straits systematically sort out their bills and decide what to prioritize. "Sort of a triage of what must get paid," as Schlesinger describes it.
Once you've sorted and prioritized, "your third step is to ask for help from those places that you don't think you're going to be able to make timely payments," Schlesinger recommends. "That's a concept called forbearance. You're going to talk to your landlord or your mortgage holder. And you're going to say 'I am negatively impacted by the virus. I need help. I need a break. I can't pay what I owe you.'"
(An additional CFPB resource provides more information on mortgage and housing assistance during the coronavirus national emergency.)
Most companies have been negatively affected by the current crisis, and many are making allowances to those with outstanding obligations. "You're going to ask each of the places where you owe money, or you have ongoing bills and obligations, you're going to ask for forbearance," Schlesinger suggests. "In that conversation, you're going to find out what is possible."
Those terms can vary widely, from no leniency to some extended period of relief. But having the conversation gives you the information necessary to adjust your payment plan as needed. It will also allow you to better understand your obligations once the pandemic passes and/or your financial situation improves.
"You need a game plan to get you through a period of time when there is financial distress," Schlesinger stresses. Going through this exercise in the middle of the month will give you time to assess the situation, and reach out to creditors before the next round of bills starts coming due.