*This post may contain affiliate links, please see my disclosure
I’ve been getting a LOT of money questions over the past 2 weeks.
I LOVE IT!
People are taking a close look at their finances right now, which is always a good thing.
And I wanted to help answer some of the questions I’ve been getting over DM’s, calls and emails.
This will be a resource page for common money questions during this outbreak, and I will continue adding to this weekly!
p.s. If you have more burning questions and want to chat with me directly, let’s connect. Check out my Financial Coaching page to schedule a 15-minute discovery call.
Should I Get Life Insurance?
Now, to be clear, my answer to this questions is almost always YES, it’s not just because of the current health crisis.
I won’t be morbid here, but you do need to have the proper insurance in place to take care of your loved ones should something happen.
I always, ONLY recommend Term Life Insurance, because it’s the cheapest option for coverage, and isn’t trying to rip you off (like Whole Life, Universal Life, etc.)
The simplest way is to grab a quick, free online quote from one of our top life insurance companies.
For example, using Haven Life, it literally takes 30 seconds to get an estimate (I know, I just did it).
I recommend at least $500,000 of coverage, or 10x your salary (whichever is more). And I recommend at least a 15-20-year policy.
p.s. My 30-second quote for 20-year term life at $500k, was between $22 – $40 per month.
I’ve put together a list of the best life insurance companies that can give you a low-cost, online quote.
Check out the top life insurance companies and get a quick quote today!
Should I Keep Investing?
If you don’t have a good-sized emergency fund and a stable job situation, I would say NO, stop investing and stack as much cash as possible until your situation stabilizes, or until you have a larger emergency fund.
But, if you have an emergency fund that helps you SLEEP AT NIGHT (I recommend 6+ months during a time like this) and a stable job situation, then YES, please keep investing.
If you have read through my Personal Finance 101 post, you know that I recommend investing in your work 401k (up to the match) first, and then open and max out a Roth IRA. Do this to maximize your returns.
Remember, if you keep investing, every paycheck, every week, every month, you will build wealth. Investing in the market ALL THE WAY DOWN, and ALL THE WAY BACK UP will ensure that you get great deals on low-cost stock prices. Investing only in Index Funds will ensure you are diversified across the entire market and don’t pay CRAZY HIGH investment fees.
Should I Refinance My Mortgage?
If the numbers make sense.
In general, if you can drop your rate by 0.5% or more, and will be in the house long enough to make back the refinancing fees, then yes, it’s a great move.
Mortgage expert Casey Fleming has a great loan calculator that lets you plug in your numbers to see if it’s worth it, and how quickly you can recoup your costs.
Right now, mortgage rates have plummeted, and you could save a significant amount by pursuing a low-cost refinance.
The best place to compare rates of online lenders is using Credible. They collect your info, and compare rates at the top online lenders (places like Quicken Loans, Caliber Home Loans, LoanDepot and more). Their application is a ‘soft’ pull on your credit, so it doesn’t impact your score at all.
They show you ALL the lender fees up front, and you stay on their platform right through closing.
Oh, and you can get a mortgage rate comparison within 3 minutes.
Check out the top mortgage rates at Credible.com
Should I Refinance My Student Loans?
Only if you already have Private Student Loans. If you are currently holding Federal Student Loans, the new relief bills that were passed allow you TONS of benefits, including skipping payments, waiving interest and penalties, Income-Driven Repayment options and the ability to work toward Public Student Loan Forgiveness.
Refinancing a Federal Loan into a private loan would lose you most of those benefits.
BUT, if you already have private loans, now is a GREAT time to take a look at rates and see if you can save some serious interest by refinancing those loans.
Not surprisingly, I also recommend Credible here. They are the best rate-comparison tool out there, and will help connect you with the best rate and terms for your student loan refinance.
Check out the best Student Loan ReFi rates at Credible.com
How Do I Lower My Credit Card Payments?
Right now, the quickest way to do this would be to call your credit card company and see what they can do for you. Credit card companies have been given guidance by the FDIC to work with customers during this crisis to be lenient with their interest and penalty policies.
The conversation should go something like this:
You: “Hey credit card company. I was wondering if we can lower my interest rate right now? Things are tight, and I’d like to know what my options are?”
CC: “It looks like you’ve been a great customer, let me see what I can do.”
Ok, it might not be that easy, but if you don’t ask, the answer is always NO.
They may offer to lower the rate temporarily, or offer to transfer your balance to a 0% interest card. Just make sure you understand if there are any extra FEES with whatever they offer.
The other option is to move your high-interest credit card debt to a 0% interest card yourself. This is called a “balance transfer” and can save you a significant amount in interest.
Remember, lowering your payment does NOTHING if you don’t have a plan to pay it off quickly! Check out my guide to Paying Off Credit Card Debt for more details.
Should I buy X, Y, Z Stock (or Gold)?
First, I cannot give any guidance on what stocks to buy (or not), as “this site is for informational purposes only and cannot be taken a financial advice” (that’s what my sidebar disclaimer says!)
Second, I don’t ever recommend stock speculation. But if you want to use some of your play money to try and buy the next “hot stock”, then follow these guidelines:
- make sure it’s no more than 10% of your total investments
- make sure whatever money you invest, you are willing to lose
- make sure it does NOT impact your financial goals
- make sure you understand the tax consequences of buying and selling stocks outside of your retirement accounts
If you can follow those guidelines, then go ahead and buy whatever your heart desires.
A quick, no-fee way to do this is through M1 Finance
Should I Sell My House Right Now?
What? I don’t know.
Ok, but seriously, something as big as selling your house isn’t a simple YES or NO answer. This is a deeply personal decision, and has to do with life circumstances (New job? Moving? Growing family? Something else?).
If you are already in the process of getting your house ready to sell, I wouldn’t simply abandon that because the market is going crazy. You may have to adjust how open houses work (Haz-mat suits? Lots of hand sanitizer? BYOTP?)
Yes, things are volatile, but if you are ready to sell, then sell the dang house.
Is Now A Good Time To Buy A House?
If you are in the financial position to buy a house, and have already made plans to buy, just make sure you are comfortable taking on a mortgage right now.
And heck, if you can save money on a smaller mortgage vs. the high costs of rent (which probably won’t be going down any time soon), then it could be a great idea to buy right now.
But if you are concerned about any of the following, you may want to reconsider:
- If your job may be affected by the COVID-19 outbreak
- If you anticipate the housing market will drop housing values far enough that you will never earn it back (many people had this happen in 2008-2009)
- If you don’t have a sizeable emergency fund (6+ months recommended at this point)
- Or if you are selling a house and looking to buy a new one, just make sure you keep an eye on the market and all the details. You don’t want to get caught in-between selling/buying, and have the outbreak put you in limbo with your housing plans.
Right now, there is a LOT of uncertain. Projecting the future is impossible at this point, but just make sure you are certain of your plans before taking on the biggest debt of your life.
How Will Job Loss Affect My Credit Score?
There are over 200 factors that make up your credit score.
The 2 most important things that make up for more than 60% of your score are:
- Payment history
- Credit Utilization
If you lose your job, can’t make your full payments, and want to preserve your credit score, here are a few things you can do.
- Payment. Call each of your creditors (credit cards, loans, etc.) and explain to them your current financial situation. Most are understanding that we are in a unique time, and may be able to help create a plan for paying them back with a reduced monthly payment during your job loss. Ask them to NOT report any delinquency to the credit agencies as long as you stay on plan. Communication is key here.
- Utilization. You may be tempted to use your credit card during this tough time. DON’T. Instead, research all of your Financial Resources to get the help you need to pay your bills. And start living on an Emergency Budget, cutting back on unnecessary spending until your situation improves. And don’t forget to apply for unemployment, there is a LOT of help coming from the federal government during this crisis.
The latest relief bill does have credit protection built in as well, so even if you default, *hopefully* your credit score will still be protected (but call your lender anyway!)
In a time like this, I would not stress about your credit score, but focus on your immediate needs and your immediate family. Communicate often with your lenders, and make sure to put together a money plan to weather this storm.
Oh, hey, I have a FREE Budget Template you can use too, so grab your copy today!
Do I Need To Create A Will?
But always, my answer is YES to this. Having a plan for your assets and family requires have a good Will in place.
The simplest (and cheapest) way to do this is using an online service like LegalZoom.
I recommend checking out their packages, which includes Last Will & Testament, Living Will (Healthcare Directive) and Power of Attorney. Plus, 1 year of attorney advice to help you get all the details right.
Check out how to create a Will using LegalZoom today.
I will keep adding to this resource, keep the questions coming!