March 2020
By Michael Kalscheur, CFP®
Partner/Senior Financial Consultant, Castle Wealth Advisors, LLC

If you are like most people, you are probably worried about how the coronavirus will impact your financial future. We recommend that instead of waiting around for the state or federal government to pass a new law, take matters into your own hands and proactively improve your financial preparedness.

Here are 10 things you can do right now to improve your financial situation today:

  1. Don’t take any drastic actions. Turn off the TV and online feeds and take a big breath. We’ll all get through this together.

  2. Balance your checkbook. Yes, really.  

    Once this is done, take a sheet of paper and list all your assets on one side of the page and all your debts (with interest rates) on the other side.  You can’t make good decisions if you don’t know where you stand currently. Just by completing this simple exercise you may realize that you are in a better place than you thought.  

  3. Review your family budget. If you don’t have one, now is the time to develop it.

    Here again, you can’t plan for the future if you don’t know where things stand currently. How much income do you have coming in? What fixed expenses do you have, such as mortgages and car payments?  List both minimum payments for credit cards and other installment debt, along with your normal payment.  Make the minimum payments on your debts to accumulate cash. 

  4. Be a cash hoarder! How much is in your checking account vs. your monthly budget? If you have less than one month’s living expenses in your checking account you need to make immediate changes.

  5. Contact your landlord, bank and credit card companies and see if they can lower your monthly payments or defer payments. If you don’t ask the answer is no, so you might as well ask.
      
  6. Look for variable expenses that you can cut out temporarily. Stop going to Starbucks daily. Maybe a coffee pot at home would be better.

    What about streaming services? Do you really need Hulu, Disney+, Netflix, HBO GO, Amazon Prime and cable? Pick one. Next month you can change, but don’t pay for shows you can’t watch.

    Stop the gym membership (Were you even using it that much)? Cutting unnecessary expenses now will give you the financial flexibility to afford them down the road.

  7. Don’t kill your financial future. Closing out that IRA or 401k may sound like a good option, but not only will you pay ordinary income tax on any distributions, you’ll pay an additional 10% penalty if you are under age 59½.

    Instead, see if your 401k plan allows loans – not taxable and the interest is credited to your account. If cash flow is tight, consider cutting back your contribution.

    Don’t make any major purchases. No new cars, boats, or iPhones. Don’t commit to any additional dollars going out the door. We are trying to save money, not spend more!

  8. Shop around for your insurance. Most people get a bill for their insurance and just pay it, year after year.  Now that you have some extra time, shop around for a new company – home, auto, life, disability and umbrella. Maybe your company is still the best, but maybe it’s not.

  9. Be creative! Look for ways to save some money each month.
      1. Need a gift for family or friends? Try making something for them instead of buying a gift.
      2. Use coupons for groceries and all kinds of other items!
      3. Instead of getting take out, dust off those old cookbooks and let the kids pick a recipe that they can make (with your help).
      4. Have you ever gone shopping at Goodwill before? You’d be surprised and the deals you might find.
      5. Learn a new skill via YouTube! There are plenty of videos on home repair, car maintenance, gardening/landscaping, cooking, etc.
      6. Start planning out your meals. If you know what to make, it’s easier to make a shopping list and then stick to the list! Don’t spend extra on food you don’t need.
      7. Cut back on driving around to pick up just one or two things. Consolidate your trips into one when necessary. 

  10. Look for ways to bring in some extra cash. Can you pick up an evening or weekend shift at the local grocery or hardware store? Deliver packages or food. Do you know a trade or skill that you can moonlight on evenings or weekends?

Don’t be scared of this short-term national health problem. Eventually the economy will turn around. Use this extra time to take control of your finances and put yourself in the position to help not only yourself and your family, but your neighbors and community as well.

Michael Kalscheur, CFP®, is a Partner/Senior Financial Consultant at Castle Wealth Advisors, LLC. Castle specializes in helping families and closely-held business owners with valuations, succession planning, estate and income tax analysis and retirement income security. Castle’s senior partners work with clients throughout the country in making logical decisions that help them fulfill their personal and business financial goals. For more information visit www.Castle3.com, call 1-888-849-9559 or e-mail Michael directly at .