9 tips for budgeting during the pandemic: Which bills should you pay first?

“There are always opportunities"
Posted at 8:52 AM, May 11, 2020
and last updated 2020-05-11 18:10:27-04

William Brown and Curtricia Burrell have a big expense to manage. They're getting married, but they know that planning a wedding in the middle of a pandemic may not be right for everyone.

“If they have enough money for their expenses after the wedding, then I say go for it," Burrell said. "But, if they for a second have a second thought in their head like, 'Maybe I shouldn’t,' then I would say probably pause.”

Figuring out how to pay the bills is tough for a lot of people right now who have been furloughed or lost jobs because of the coronavirus. Even for those still employed, the current economy leaves most people much more conscious about their finances.

Will Brown planning for upcoming wedding to Curtricia Burrell

Al Riddick, president of Game Time Budgeting, works with a number of people, including Brown and Burrell, on how to pay down their debt and save money.

“There are always opportunities, no matter how bad things in life are," Riddick said. "It’s just all about the mindset that you utilize to look at a certain situation."

Riddick named 9 tips for budgeting during the pandemic:

Create an itemized budget

Riddick said it's a good idea to try to come up with a list of necessary budget items that are needed over a two- to four-week period. Brown and Burrell say they had different ideas about spending, but they are working on budgeting based on Riddick's advice.

“One of the more impactful exercises we’ve done so far is just simply going through statements and finding our spending habits,” Brown said.

Will Brown and Curtricia Burrell are budgeting for their upcoming wedding

Pay these bills first

Riddick said the items he recommends paying first are rent or mortgage, groceries and insurance premiums.

"If you’re in an apartment and, let's just say something catches on fire and you don’t have renter's insurance because you let the premium payment lapse," Riddick said, "then, all of your worldly goods could go up in smoke.”

Ask about mortgage forbearance

If you have a federally-backed mortgage, you can ask your lender for a forbearance for up to 180 days if you can't pay your mortgage as part of the CARES Act. That means you can pause your payments or work with your lender to make partial payments during that time.

"If you can, let’s say, pay 50 percent on your mortgage," Riddick said. However, you need to contact the lender to make the request.

“During this time, of course, hopefully that will allow people to take care of other pressing financial obligations,” Riddick said. The law also allows for a second 180-day forbearance request, which potentially gives a borrower almost a year of suspended payments, if necessary, he said.

Ask about student loan forbearance

Federally backed student loans are automatically suspending payments through Sept. 30, 2020. If you have a student loan through a private lender, you'll need to check to see what accommodations they may offer.

Negotiate minimum credit card payments

“The first thing I would do is contact my credit card issuer,” Riddick said.

He said it's important to be transparent and open with the creditor about your inability to make the minimum amount due. However, Riddick said, try to negotiate an amount you can pay so that you are at least paying something each month.

Ask creditors not to report you to credit bureaus

Can I really do that?

Riddick said to make that part of the conversation with the creditor. There are three credit reporting agencies: TransUnion, Equifax and Experian.

“You, as a client or customer, do not want to lower your credit score during this time, if you can avoid it,” he said.

Avoid borrowing from your 401K

“One of the things that the government has done during the pandemic is give you the opportunity to borrow up to $100,000 from your 401K,” Riddick said.

But he doesn't think most people should touch their retirement accounts. The reason is it takes a long time to save the money, and it will take a long time to pay it back.

“That would be my last resort so far as tapping into my retirement funds early, to avoid putting myself in an even worse financial situation,” he said.

Pay bills based on percentage of income

Realizing unemployment checks are a fraction of your normal income, Riddick said, try to work with your creditors to accept payments based on a percentage of your net income. For example, if 25 percent of your regular income goes to mortgage or rent, try to negotiate paying 25 percent of what you have coming in to mortgage or rent.

“You can still apply the same percentage of your net income to a respective expense category," he said.

Put money in savings

Riddick said it can be done.

“A lot of us are sheltered in place or working from home right now. So the opportunity is there that you probably aren’t going to be eating out as much," Riddick said. "You're probably saving money on gasoline due to the fact that you don’t have a commute anymore.”

It's something Burrell said she's already started to do.

“I kind of started putting any extra dollars that I had that I knew I would probably spend towards food or something unnecessary I began to just place it in my savings,” she said.

They also already established a savings plan for their wedding expenses.

“We’ve already been pretty disciplined on putting money to the side, a set account that we have not touched,” Brown said.