Terry’s Columns Where Do We Stand Now?

Where Do We Stand Now?

By Terry Savage on April 03, 2020

The stock market crisis has morphed into an economic crisis, which has hit home in an immediate personal finance crisis for millions of Americans. There have been !0 million job losses in the past two weeks, and at least double that number are waiting for a layoff notice in the coming days.

No one working in America is prepared for this kind of financial catastrophe. That’s why despite the headlines of the stimulus checks and small business loans, we must see government enact new programs around unemployment, rent and utilities, and basic human services to deal with this crisis.

Eventually the virus will be conquered –but now beyond the immediate healthcare crisis — there is a real need to make sure our society’s financial structure will remain standing, so it’s there waiting for our comeback.

First, here’s an overview of the existing situation. I want to make one key point: There is no way our government can get organized to get checks out to more than 100 million individuals, and loans to small business pushed through banks that are already overwhelmed with their own business and real estate loan challenges!

Remember, this is the same government that couldn’t get the Obamacare website to work. And couldn’t get organized to find, manufacture, import and distribute life-saving ventilators and masks.
So, while there was great excitement, bordering on an Oprah-like giveaway (you get a check, you get a check!) this is going to take months.

Many people who need their checks most are going to be difficult to “find” because they do not file taxes because of low income, are not on Social Security or disability auto deposit, and have various issues like changed addresses or bank account numbers.

The government says it is organizing a portal for these people to register, suggesting visiting IRS.gov/coronavirus — a site that basically says “don’t call, check back”!

Now, here’s a review of the top financial issues that should concern all of us.

Care Act, Stimulus Checks
I made a decision a week ago to become a temporary “expert” on who gets what when it comes to Stimulus Checks. That resulted in an overload of hundreds of posts on my website, as well as emails. I can’t possibly answer all your individual questions — but you will see below this article, the next article is my “TOP 10 Stimulus Check Q&A.”

Filing for Unemployment
While the Federal government has increased benefits for the unemployed, it is the STATES that manage the payments. Forget long lines at the unemployment office, which were so poignant in previous recessions. Now everything is done online — at websites that were never designed for this volume and are completely overwhelmed.

That stress is offsetting the hope of longer and larger benefit checks.
PLUS, these websites were never designed to process unemployment for the self-employed, which was mandated by the Care Act. Every state will have to completely redesign its website to accept these applications. And state governors are understandably preoccupied with dealing with the current medical situation.
Bottom line: larger and longer and new unemployment benefits may be promised and deserved, but that won’t happen soon.

Paying Rent and Mortgages
Without jobs, many people simply can’t pay. That’s a fact of life. But a rent strike is a misguided effort to pressure landlords into concessions. If those who can don’t pay their rent, the landlord can’t pay utility bills — and even worse, can’t pay real estate taxes. Those real estate taxes are needed to pay our police, fire, paramedic and many healthcare workers.

The system is going to have to address this immediately. And it has started the process already. Check your local authorities, but almost every city and state has prohibited evictions and foreclosures during this period of shutdown.

The Federal government has said that landlords who own buildings that are federally finances (HUD, Fannie Mae, Freddie Mac,etc) may not evict tenants or charge fees or penalties for a period of 6 months since the Care Act was enacted.

Similarly, the legislation prohibits foreclosures on all federally backed mortgage loans for a 60 day period, beginning March 18, 2020 — AND provides up to 180 days of forbearance for those impacted by a financial hardship related to the Covid-19 emergency.

Bottom line: You are likely not going to be evicted or foreclosed in the next 6 months. Even if your mortgage is not federally insured (the vast majority are), there will be immense pressure on authorities to leave people in place.

BUT, the property owners including corporate landlords and a lot of individuals who own rental property, are going to be in dire straits during this period. Contact your landlord and offer to pay what you can. Again, the entire system depends on it!

Bills and Credit
Could I just say “let’s think about it tomorrow”? We are in a war for our financial existence. Almost everyone’s credit report will be dinged, some more sharply than others. This period will go down as an asterisk in financial history –much as the sports seasons will be marked with an asterisk. Eventually, it will be a gap that doesn’t “count” when we get through this. The top priority is feeding your family and staying safe.

Health Insurance — The NEXT Crisis
Millions of American families have health insurance tied to their jobs. When the job goes, so does health insurance. Yes, there is COBRA to extend coverage — but it is expensive and especially so for those who now have no income.

Most experts have said that this national health crisis should be a “triggering event” allowing you to enroll immediately in that Affordable Care Act at www.Healthcare.gov. It’s worth trying. Or else go to a site like www.eHealthInsurance.com to shop for a one-year policy to tide you over if you’ve lost your health insurance. It won’t cover everything, but it’s a start.

This is a rolling disaster! Like a chain of dominoes, when one piece of our social fabric is torn, others must follow. It is up to all of us to help those who are now facing personal financial ruin, while worrying every minute about the health of our families.

Some have suggested that when this is over, we should cancel the student loans of every healthcare worker who has been on the front lines. I think that’s a great start. But it will take national leadership, organization, and coordination to bring our system back together again.

However,”this too shall pass.” So, in the meantime, reach out and help in any way you can. That will do a lot of good in the long run. And that’s The Savage Truth.



a personal
finance question