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How to Keep Your Living Expenses in Check

Resources for financial survival in this ever-changing pandemic landscape.

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In an effort to stop the spread of the coronavirus, many businesses have shut down either temporarily or permanently, leaving millions of Americans without a paycheck.

As of early May, the U.S. unemployment rate was just under 15 percent—the worst since the Great Depression in the 1930s—with more than 20 million people losing their jobs in the month of April alone. With so many people filing for unemployment income benefits, it could take months for all of the promised relief funds to arrive.

Just like a row of dominoes, job losses and business closures have had a ripple effect, making it difficult for many to pay for housing, food, and other necessities. And while the government has provided some emergency financial assistance, it is not nearly enough to sustain most individuals, couples, and families for the long term.

While the unknown can certainly cause a great deal of stress, there are ways to take advantage of the various financial resources that have been made available without causing too much damage to your savings.

The CARES Act

One of the biggest financial-relief steps taken by the U.S. government was the passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act. It addresses a number of key financial issues, including unemployment, mortgage assistance, and taxes. Some of the highlights of this legislation include:

• Cash Payments and Unemployment Assistance – All United States residents who have adjusted gross income of $75,000 per year or less (or up to $150,000 for joint tax filers) are eligible for a $1,200 stimulus payment ($2,400 for couples who file their taxes jointly), as well as an additional $500 per child who is under age 17.

• Increased Unemployment Income Benefits – Those who are eligible for unemployment assistance may receive an additional payment of $600 per week. These benefits are currently on track to continue through December 31, 2020.

• Elimination of the IRA Retirement Fund Early-Withdrawal Penalty – Typically, those who make withdrawals from their Individual Retirement Account (IRA) or employer-sponsored retirement plan before reaching age 59  incur a 10 percent early-withdrawal penalty from the IRS. This has been waived temporarily on withdrawals of up to $100,000. (Income tax on such withdrawals will still be owed, but this tax can be spread out over a period of three years). The money that was accessed may also be repaid without impacting maximum annual contribution limits over the next three years.

• Temporary Waiver of Required Minimum Distributions (RMDs) – Under normal circumstances, those who are age 72 or older must withdraw at least a minimum dollar amount from a Traditional IRA or employer-sponsored retirement account. These required distributions have been temporarily waived for 2020.

• Increased Loan Amount from Retirement Plans – Retirement plan participants may also borrow up to $100,000 (an increase of $50,000) without penalty, based on the provisions of the CARES Act.

• Federal Student Loan Payment Relief – For borrowers of federal student loans, payments automatically stopped on March 13 and will be postponed until September 30, 2020.

Renter and Homeowner Assistance

The pandemic has significantly impacted housing. In fact, according to MarketWatch, more than half of renters say that they’ve lost their jobs due to the COVID-19 crisis and could face difficulty keeping a roof over their heads, especially if they must make up for any back-rent payments that are due going forward.

Because housing can typically be your largest monthly expense, the CARES Act provides mortgage relief for borrowers. In this case, mortgage payments can be postponed at the request of the borrower in cases where COVID-19 has caused financial hardship. But this doesn’t mean that the payments are erased or forgiven.

Mortgage payments may be postponed for up to 180 days for qualifying borrowers (and possibly for an additional 180 days  or even one year) upon request. Typically, these missed payments will simply be tacked on at the end of the mortgage term, or repaid in a lump sum at that time. Alternatively, depending on the lender, mortgage borrowers could have the option of repaying what is due in one lump sum right away—although this could prove to be difficult for homeowners who have little or no income and/or a depleted emergency fund.

Similarly, the CARES Act was also intended to offer eviction protection for renters, as well as prevent landlords from charging penalties or fees due to the non-payment of rent. However, even in light of continued financial struggles for tenants, Texas landlords are still allowed to file for evictions and, when the rent moratorium is lifted, proceed with evictions.

In some instances, despite orders to postpone evictions, landlords are reportedly forcing tenants out by changing the locks. There is still a specific procedure that landlords are required to follow, starting with a notice from the landlord to “vacate” the property, followed by the filing of an eviction case that is filed in a county Justice Court. Based on the CARES Act, landlords must wait until after July 24, 2020, to begin the eviction process.

Other Financial Resources

Things continue to change on a near-daily basis with regard to coronavirus financial relief, so it is beneficial to explore as many resources as possible to help you get through this challenging time. Some of the top disaster-relief resources include:

• Benefits.gov provides a wide range of details regarding where to obtain additional information on unemployment and healthcare, as well as on where to find loans and financial assistance if you own a business. There is also a telephone hotline available 24/7 if you need assistance with various issues that have been triggered by the coronavirus crisis.

• Usa.gov/coronavirus provides in-depth information on the government’s response to COVID-19. This resource offers up-to-date details on stimulus payments, health information from the CDC (Centers for Disease Control), and guidelines for opening up the economy. There is also a link where you can find facts about coronavirus rumors and myths, to help you determine what is fact and what is fiction.

       The Small Business Administration is also offering disaster assistance. The SBA also has local resource partners that could provide relief for Houston-area business owners. These include:

Texas Gulf Coast Small Business Development Center (SBDC)  (713) 752-8444

WBEA Women’s Business Center (WBC) –  (713) 681-9232

Houston SCORE  (713) 487-6565

Coronavirus.gov – This website provides details on how to prepare and protect yourself from the COVID-19 virus, as well as what to do if you think you are sick. There are also specific resources available for travelers, small-business owners, businesses, healthcare professionals, and schools.

Office of the Texas Governor  For more Texas state-specific information, you can visit the website for the Office of the Texas Governor. In addition to links regarding economic and healthcare details, you can also access “Governor Abbott’s Proactive Response to COVID-19,” which lists in-depth information on how Texans can leverage both state and federal financial assistance.

The Greater Houston LGBT Chamber of Commerce – The LGBT Chamber of Commerce also has a resource list on their website. Resources include the U.S. Small Business Administration, the Texas Restaurant Relief Fund, the CDC, and the World Health Organization. You can also find a “Guide to the CARES Act” there.

Additional Help

Because everyone’s financial needs and objectives are different, talking with an experienced financial advisor can be beneficial for getting answers and advice based on your particular situation.

Doing so will also allow you to put a plan in place that outlines the steps needed to move forward financially—and it can help you maximize any of the debt-relief and/or stimulus funds that you are eligible for, while still keeping your long-term retirement and savings goals in mind.

This article appears in the June 2020 edition of OutSmart magazine.

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Grace S. Yung

Grace S. Yung, CFP, is a certified financial planner practitioner with experience in helping domestic partners plan their finances since 1994. She is a principal at Midtown Financial LLC in Houston and was recognized as a “Five-Star Wealth Manager” in the September 2017 issue of Texas Monthly.

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