Second stimulus checks, student loans and more: FAQ during coronavirus
Here are answers to some common questions about personal finance during the coronavirus pandemic. (iStock)
As COVID-19 continues to spread, personal finance remains a topic at the forefront. Questions you had at the beginning of the pandemic may be much different from ones that felt relevant seven months into this crisis. With that in mind, we’ve tried to answer some common questions about personal finance during the ongoing coronavirus pandemic.
Here are 6 common questions people are asking, relating to personal finance:
- Will there be a second stimulus check anytime soon?
- Can I lower my private student loan payments?
- Is now a good time to purchase a home?
- What do I do if I have too much credit card debt?
- How much should I have in emergency savings?
1. Will there be a second stimulus check anytime soon?
Congress is still in discussions about whether there will be another round of coronavirus stimulus checks. Congress — not the president alone — is in charge of federal spending and both sides are still trying to agree on terms.
That said, both parties have suggested support for sending more $1,200 stimulus checks to boost the U.S. economy and help those struggling financially during the pandemic. It's never too early to prepare for incoming cash.
Here are some ways you can use a second stimulus check (if it comes):
- Use it to keep up with your credit card bills and other monthly expenses
- Pay down existing debts
- Put the money into a savings account
Not only will putting the money towards outstanding bills and loans help you get out of debt sooner, but it will also help you save on the amount of interest you will pay overall. If you're lucky enough not to have any existing debt, put the money into your savings, and leave it there. After all, building an emergency fund is a great way to protect yourself from having to take on debt in the future.
SHOULD YOU PAY OFF DEBT WITH YOUR STIMULUS CHECK?
2. Can I lower my private student loan payments?
Though private student loan payments aren't protected under the CARES Act in the same way that federal student loans are, you can still take steps to lower your payments. In particular, it may be possible to refinance your student loans and to secure a lower interest rate, which can help you lower your monthly payments.
Explore Credible to review a rate table and to compare rates from multiple lenders at once without impacting your credit score.
10 OF THE BEST STUDENT LOAN REFINANCE COMPANIES
3. Is now a good time to purchase a home?
If it's financially feasible for you, now could be a good time to buy a home. Mortgage rates are at historic lows, which has led many buyers to take the plunge into homeownership. With that being said, it's also important to note that because there are so many buyers on the market, inventory is low and there is a lot of competition for the few listings that are available.
It's up to you to make the decision for yourself on whether buying now makes sense. if you're in a good spot financially and would like to take advantage of the low-interest rates, buying now might be the right choice. However, if you have other financial priorities like paying down credit card debt, it may be worth waiting until the market calms down.
If you think that buying now might make sense for you, visit Credible to compare lenders and mortgage rates.
HOW MUCH MONEY DO YOU REALLY NEED TO BUY A HOUSE?
On the other hand, if buying a home is no longer a priority for you, there are other things you can do with your money. Again, our two main recommendations are to either pay down your debts or to put the money into savings.
4. What do I do if I’ve accumulated credit card debt?
If you've accumulated credit card debt during the pandemic, you're not alone. Many people have had to lean on credit cards to make ends meet. However, it's important to take steps to pay down credit card debt as soon as possible.
With that in mind, you may be eligible for a debt consolidation loan. A debt consolidation loan is a personal loan that allows you to pay off your credit cards and to centralize all your debt into one place. With this method, you’ll only have to worry about making one payment each month and you'll likely be able to do so at a lower interest rate.
Use Credible's personal loan calculator or visit their website to find the best personal loan rates.
Alternatively, if you have excellent credit, you may be able to qualify for a balance transfer card.
As the name suggests, a balance transfer card allows you to combine your existing credit card balances into one monthly payment. As an added bonus, these cards often come with a 0% introductory interest rate period, which could allow you to pay down your debt faster. Visit Credible to find a balance transfer card today.
3 WAYS TO ELIMINATE CREDIT CARD DEBT
5. How much should you have in emergency savings?
Those who are in the process of building an emergency fund often wonder how much money they should put aside. In this case, the amount that you should have saved up will depend on your unique monthly expenses. Conventional wisdom states that you should aim to have three to six months’ worth of expenses in savings at any given time.
If you’re just starting to work on your emergency savings, it's a good idea to work towards that 3-month goal. After you have that much in place, work on building towards six months. Then, consider shifting your funds toward other aspects of financial planning, like saving for a down payment or putting money towards your retirement.