The coronavirus outbreak has battered the U.S. economy. Every week, millions more are added to the unemployment rolls, creating a financial calamity for many American families. If you’ve lost your job or had your work hours cut, you should prioritize your spending to stretch your savings. The best way to do that is by adopting the Mayday Budget.
Desperate times call for desperate measures. Move quickly to buy yourself adequate time to get back on your feet financially without going deeply in debt. The Mayday Budget can help you do that by identifying the four critical areas of spending.
1. Your first priority is food.
You have to eat, so that’s the first item in the Mayday Budget. However, you must cut your food expenses as much as possible. No eating out, take out or ordering in. Make a menu plan and cut out the frills. Make a grocery list before going to the store and stick to it. Cut out home delivery.
2. Your next priority is housing.
Whether you own your home with a mortgage, or you rent, you have to keep a roof over your head. If you can’t make a payment, call your lender or landlord and let them know ahead of time. Do not hide from them. Ask for an extension. Many are willing to work with you during the coronavirus crisis by extending payments and waiving late penalties. Take advantage of those offers.
3. Your next priority is utilities.
You need to keep the house heated or cooled and the lights on. If you can’t make a gas or electric payment, contact the utility and let them know about your financial difficulty. Like lenders, many utilities are temporarily suspending shut-offs during the coronavirus crisis and offering assistance programs.
4. Your final priority is transportation.
People are certainly traveling less these days, but you still need transportation to buy food and to be ready to return to work when the crisis passes. If you can’t make a car payment, contact your lender and ask for an extension. You also need to keep a little gas money in your budget.
These four critical categories make up the Mayday Budget. Once you’re living on it, your money will go a lot further. With any remaining funds, you can target consumer debt and other loans. If you can’t make your minimum payments on these bills, again, contact the lenders. Many credit card companies are offering assistance programs. Feel free to reach out to your Account Specialist at Christian Credit Counselors with any questions at 800-377-4469 option 5.
The Department of Education is also providing relief for student loan borrowers. Interest rates have been set at 0% until September 30, 2020 and borrowers have the option to suspend payments for that period.
These are temporary measures. As Christians, we are commanded to pay our debts. Proverbs 3:27 teaches, “Do not withhold good from those to whom it is due, when it is in your power to do it.” However, if you’re facing a financial emergency, consumer debt and other loans have a lower priority. You can catch up on them when your financial situation improves.
If you still have some income, you may also want to temporarily suspend retirement contributions during the coronavirus crisis. Withdrawing funds from a retirement account should only be considered as a last resort.
Hopefully, this helps you determine your financial priorities during this season.