Webinar for Rutgers Cooperative Extension on 8/31/20

1. Dr. Barbara O’Neill, CFP®, AFC®
@moneytalk1
https://www.moneytalkbmo.com/
https://njaes.rutgers.edu/money/
Navigating “The Two Financial
Faces” of COVID-19

3. Question:
How Have You or a Family Member
Been Impacted by COVID-19?

4. First Type of
COVID-19
Financial Impact
(“Have-Nots”)
Loss of income Food insecurity
Depletion of savings End of moratoriums
Eviction proceedings Benefit access issues
Inability to access social support systems

5. Second Type of
COVID-19
Financial Impact
(“Haves”)
Little or no asset value loss
Increased savings rate
Continued or even increased income
Decreased expenses (e.g., commuting, childcare)
Spending freely on home improvements
Other Impacts (boredom, fear, “survivor’s guilt,”
anger about lost opportunities, mental health)

6. What Experts Are Predicting
NOT a “V” shaped recovery
NOT a “W” shaped recovery
NOT a “U” shaped recovery
But… a “K” shaped recovery
Source: COVID-19 is
Dividing the American
Worker, The Wall
Street Journal,
https://www.wsj.com
/articles/covid-19-is-
dividing-the-
american-worker-
11598068859

7. Managing Money
in a Crisis: A 12-
Step Action Plan

8. Step #1:
Create a
Budget
and a
Payment
Plan
• Budgets are needed now more
than ever (increases control)
• RCE Resource:
https://njaes.rutgers.edu/money/pdfs/
fs421-worksheet.pdf
• Project future income and
expenses
• Also create a bill payment
calendar:
https://files.consumerfinance.gov/f/doc
uments/cfpb_well-being_bill-
calendar.pdf
• Ask to change payment due dates
(if needed)

9. Step #2:
Spend
Less
• Try to reduce spending by amount
of lost income, if possible.
• Track income and expenses and
adjust as needed
• Start expense cutting with
variable expenses
• Eliminate non-essential auto-
payments (e.g., streaming
services, gym membership)
• Switch to cash for most purchases

10. Step #3:
Prioritize
Spending
(3 Categories)
Needs (Needed for survival)
• Food, rent/mortgage, utilities,
medication co-pays, phone, internet,
health insurance
Obligations
• Prioritize according to non-payment
consequences (see next slide)
Wants
• Not needed to survive and you have
no obligation to pay (dues, gifts,
donations, travel, retirement savings)

11. Prioritizing Obligations
1. Court Fines and Fees 7. Student Loans
2. Child Support 8. Unsecured Debt
3. Insurance (auto, property, life, disability) 9. Interpersonal debt
4. Money Judgments 10. Other?
5. Secured Debt
6. Taxes and Tax Debt

12. Step #4: Adjust
Voluntary Payroll
Deductions
Consider temporarily suspending
(or reducing) voluntary payroll
deductions:
• Automated charitable contributions
• Automated credit union deposits
• Automated retirement plan
deposits
• Tax over-withholding

13. Step #5: Seek
“Side Hustle”
Income, If
Possible
• Ramp up an existing “side hustle”
• Start seeking out new freelance
opportunities
• Look for growth opportunities in a
poor economy
• Ramp up social media use (e.g.,
LinkedIn)
• Respect employer conflict of interest
policies and non-compete contracts

14. Step #6: Stay
Insured
• Take advantage of employer
insurance for as long as it lasts
• Find out how to pay HI premiums
without a paycheck (if furloughed)
• If health insurance ends, transition
to COBRA or the ACA Marketplace
• ACA coverage with a subsidy
(especially if you have no income)
will be much more affordable; go to
www.healthcare.gov
• Ask about auto insurance discounts
or coverage changes to reflect new
driving realities

15. Step #7:
Adjust Your
Income Taxes
• Take out or set aside withholding for
taxes on unemployment benefits
• Complete a new W-4 form when you
to account for a reduced income
(partial furlough or layoff)
• Take advantage of income-based tax
credits that a furlough may have
made you eligible for
• Earned Income Tax Credit
• Retirement Saver’s Credit

16. Step #8:
Protect Your
Credit
• Call creditors and utilities and explain
your reduction (or loss of) income
• Ask for flexibility until you get back on
your feet
• Do not agree to repayment terms that
you cannot afford
• Take good notes about extra fees and
interest and new repayment terms
• Ask whether delayed payments will be
reported to credit bureaus
• Check credit report frequently

17. Step #9: Build
Your Human
Capital
• Don’t sit back and wait for a COVID-19
vaccine to appear
• Use free time to “upskill yourself” and
prepare for your next position
• Webinars, certification programs, tech
tinkering, online courses
• Focus on gaps in your skill set
• Make yourself as marketable to
employers as possible
• Interviewers WILL ask what you did
during COVID-19 down time

18. Step #10:
Savor the
Extra Time
• Resist the urge to work on furlough
days; e.g., e-mails and phone calls
(employers prohibit this)
• Enjoy walking or other physical
activity
• Spend extra time with family and
friends (even if video chatting)
• Home maintenance activities
• Financial management activities

19. Step #11:
Reach Out for
Help
• Call 211 or visit www.211.org for
information about local human
services
• Benefits from agencies free up
money for other expenses
• Expect processing delays and
shortages
• Family members and churches
may also be able to help

20. Step #12: Be
Aware of Scams
and Frauds
• Financial distress saps “mental
bandwidth” to make good decisions
• Fraudsters take advantage of people
who are stressed out and distracted
COVID-19 Scams to Beware of:
• Phishing e-mails and text messages
• Offers for testing or treatment
• Appeals for donations
• Phony information about government
benefits
• Sale of in-demand products

21. Tips for the
“Financially
Unscathed”
• Beef up your emergency fund
• Invest in your human capital
• Consider refinancing your mortgage
• Make prudent home improvements
with a high ROI
• Get your estate plans in order
• Assess your investment risk
tolerance:
https://pfp.missouri.edu/research_IRTA.html
• Rebalance your investment portfolio
• Get serious about philanthropy to
help others (e.g., DAF, gifting stock)

22. Watch the Stock Market!
Bullish Factors:
The stock market looks forward (i.e., 12-18 months from now), big growth
spurt in the tech sector, investors are betting on a vaccine, ultra low returns
on bonds and cash investments, and anticipation of government aid
Bearish Factors:
Possibility of second or third waves of COVID-19, delays in the availability of
a vaccine (or approval snags), a constitutional crisis following the November
election, trade war and/or supply chain issues with China, and other risks

23. Covid-19 Financial
Resources
Coronavirus Anxiety Workbook (The Wellness Society):one Talk Blog Post
https://thewellnesssociety.org/wp-content/uploads/2020/04/Coronavirus-Anxiety-Workbook-1
Financial Reality Coping eBook (Center for Financial Social Work):
https://financialsocialwork.com/downloads/financial-reality-coping-ebook
Money Talk Blog (Dr. Barbara O’Neill): https://moneytalk1.blogspot.com/ (many COVID posts)
Your Money: A Hub for Help During the Coronavirus Storm (The New York
Times): https://www.nytimes.com/article/coronavirus-money-unemployment.html

24. Final Thoughts
Take Action on Things You Can Control:
Washing hands, social distancing, wearing a mask, physical activity, checking in
with friends and family, outlook, attitude, emotions, saving, spending, and giving
Learn to Accept Uncertainty:
Identify “uncertainty “triggers” (social media, anxious family members, lack of
sleep) and practice being comfortable being uncomfortable
Focus on the Present (mindfulness principles)
Manage Stress and Anxiety: Exercise, relaxation, sleep, healthy eating
Map Out Plans On Paper: Draw three columns: Control, Adapt, and Monitor

25. Questions?
Comments?
Experiences?
@moneytalk1
boneill@njaes.rutgers.edu
Stay Safe!