The devastating economic effects of the ongoing global pandemic have forced millions of Americans to tap into their emergency savings. Unfortunately, the pandemic won’t be letting up anytime soon — and this is a huge problem for a lot of people. According to a report from CNBC, almost 14 percent of Americans have wiped out their emergency funds during the coronavirus crisis.
If your savings are running low due to the extended drop of income these past several months, here are some strategies you could try to weather these times of uncertainty:
1. Tap Your House to Get the Money You Need
Sometimes, extreme situations require extreme measures. If you own your home outright and have additional space, consider renting it out for tenancy or storage. Just make sure that this practical option does not pose a safety threat to you and your family.
Alternatively, you could sell your property by listing it for sale in the housing market. Then, move back to your parents’ home or stay at a friend’s house. This is an option if you are no longer able to make home loan payments.
If you need money as soon as possible, look for real estate companies that buy houses as-is for quick cash.
2. Make Drastic Cuts to Your Budget
Reducing your spending is the first major step you need to take to stop the financial bleeding. Take the time to go through your household expenses and decide if you need to use them. If you’re driving less, for instance, get in touch with your insurance provider and find out how you could lower the cost of your vehicle insurance.
Also, look over your credit card and bank statements to determine the amount of money you’re spending on convenience and dining out items. Many times, takeout food and miscellaneous spending rack up to a lot more than you think — and you won’t know the final amount until you check your monthly bill.
The bottom line is to cut down your expenses as much as possible to arrive at the ramen-noodle, bare-bones budget. This means nixing a lot of optional stuff for the time being, such as charitable giving, eating at five-star restaurants and Netflix or cable subscriptions.
3. Pick Up a Side Hustle
Reducing your household expenses will help you stay alive, but don’t forget the other side of the equation. You still need to earn money to help you pay off your living costs. A lot of times, a part-time gig or a freelance job can prevent you from drowning during periods where you are unable to work in your full-time job.
A few of the side hustles that you could pursue amid the pandemic include the following:
- Food Delivery – You could reach out to local eateries, such as pizzerias, and deliver food for hungry customers.
- Lyft or Uber Driver – If you don’t mind taxiing people around, you could take on this side business.
- Walk Dogs – Not every pet owner has the time to walk their furry pal. If you like pooches, you could offer dog walking services and earn good money from this gig.
4. Sell Stuff in Your Home That You’re Not Using
As the saying goes, one man’s trash is another man’s treasure. If you have stuff around your house that you no longer use (or won’t help you survive this pandemic), consider selling them online. A few examples you could put up for sale are Bob Ross paintings, clothes you no longer wear, toys and jewelry.
Online platforms, such as eBay and Facebook Marketplace, are excellent places to sell your stuff and generate the money you need to pay for food, gas and other immediate needs.
5. Place Your Retirement Savings on Hold
If you are contributing to your retirement account, now’s a great time to hit pause. This strategy could help you free up several hundred dollars, which you could use to rebuild your emergency savings, pay past due bills and feed yourself and your family. Just make sure to resume your contributions once your financial situation improves.
6. Tap Your Retirement Savings
Another option you could explore is to tap the funds stored in your IRA or 401(k). The Coronavirus Aid, Relief and Economic Security (CARES) Act allows you to take out up to $100,000 from your retirement savings without incurring a 10 percent penalty for withdrawing early.
Take note, though, that this is a last resort option. Depleting the funds on your 401(k) or IRA can negatively affect your long-term financial health. By taking out your retirement savings early, you pass on the opportunity to earn compound interest. Even if you replenish the money back later, you may not have enough time to offset the lost growth.
Don’t immediately panic when you see your emergency savings getting close to zero. Follow these strategies to help you survive these challenging times.