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Weathering Money Winter

By Terry Savage on November 18, 2020

The stock market is looking ahead to the time when COVID-19 will be wiped out by a vaccine. But until then, you and your money must survive a long winter. Hopefully, those most in need will have some help soon from a new stimulus bill. But COVID remains a problem that impacts us personally as well as the entire economy.

I often write about long-term goals when it comes to financial planning. But today you must focus directly on the next four months. If you can survive until the daffodils bloom in spring, you can truly put the financial woes of 2020 behind you.

Whether you’re hoping to return to work in time to avoid eviction from your apartment or worried about the impact of the stock market on your retirement withdrawals, this is not time to avoid reality. The first step is to figure out exactly how you will manage your money in the coming months until the reasonably expected revival of the economy.

Here are some tips:
—Rental or mortgage payments. The CARES Act placed a moratorium on evictions of residents in public housing programs and renters of properties financed by federally backed loans. That moratorium expired in July, but the Trump administration established a new one by executive order that lasts until the end of the year. It covers all renters but requires those seeking protection to submit a declaration form to their landlord attesting that they have lost income due to the pandemic, among other conditions.

Beyond that, many states have enacted eviction prevention programs. Some are set to expire at year-end. Don’t guess at your rights. Go to your state housing department to find out the law in your state.

If you have a mortgage, stay in contact with your bank. They are much more inclined to work with those who stay in touch. Remember, banks don’t want to push foreclosures, because they, too, see the possibility of recovery next spring.

—Unemployment. Many states extended unemployment beyond the original 26 weeks, giving an additional 13 weeks of coverage. That time is now running out for people who were laid off last spring as the pandemic hit.

It will be up to the federal government to pass a new stimulus bill to keep those benefits flowing. If one is not by year-end, it is likely some sort of help will be passed in late January under a new Congress, although there could be a gap of several weeks in receiving benefits.

Family, friends and public agencies including food banks will become even more important. If you are not on the problem side of this equation, become part of the solution until our government acts.

—Investment decisions. Think back to those moments of fear last April when the stock market was plummeting. Did you vow that if you ever “got even” you would sell a portion of your holdings? Well, now you have your chance, as the market has made new highs! I’m not advocating “getting out of the market.” Just recognize that it’s time to re-evaluate your holdings and your risk tolerance. Of course, you need to hold equities for future long-term growth. But how long is your time horizon for some of this money?

—Mortgage decisions. Currently, interest rates are artificially low, held down by Fed policy. But in the past few weeks, markets have shown that rates will climb, despite the Fed, on the prospects for longer term growth.

This is the time to refinance your mortgage. I have always advocated trying to pay off your mortgage by the time you retire. Now you can refi to a 15-year loan at around 2.5% in most parts of the country. And if you see no possibility of paying off that mortgage, it will still pay to refi to a 30-year fixed rate loan, likely below 3% with good credit. Check rates at Bankrate.com and at national online services such as RocketMortgage.com and GuaranteedRate.com.

This winter is no time to hibernate or pull the covers over your head. It’s a time of difficulty for many, and of opportunity for some. If you’re not worried for yourself and your own family, reach out (virtually, of course) to help others.

If we can only get to spring, things will look much brighter. And that’s The Savage Truth.

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