There are some obvious financial dangers you could face during this pandemic, like the danger of losing your job and being unable to afford the basics. We think there are also some other less obvious financial pitfalls you could experience during the pandemic. Whether or not you’ve lost your job or are severely impacted by the pandemic, make sure to avoid these pandemic pitfalls.

Payday loans.

Payday lenders are targeting consumers financially hurting from coronavirus. Americans that recently lost their job or are experiencing a loss of income are more likely to need the type of quick cash that a payday lender can provide. If you are in need of financial assistance, explore other avenues before you consider borrowing money. You may be able to make money in other ways, like picking up a side hustle or selling some of your stuff, or cut back on expenses to make ends meet. Some payday loans are hard to spot and masquerade as legitimate financial aid; some payday lenders offer assistance with rent, for example, but charge exorbitant interest rates.

Not saving for retirement.

Dire financial circumstances may force you to decrease your savings rate, but it’s important to keep contributing to your retirement accounts, even if you are forced to cut back some. When the stock market is down, invested dollars become that much more powerful. One of the last things you want to do is stop investing in your future. As we often say on the show, the younger you are, the more powerful your dollars. If you have the discipline to consistently save and invest even when the market is experiencing volatility, your future self will thank you. 

Racking up debt.

If you aren’t making the same amount of money you were a year ago or even a few months ago, it’s easy to fall into the trap of high-interest debt. If you are having trouble paying the bills every month, look for ways you can cut back and stay afloat instead of going into debt; it may be time to downsize your life. Going into debt, especially high-interest debt like credit card debt, can happen in an instant and take years to pay off. At a minimum, you need to make sure you have enough saved to cover your deductibles. If your car breaks down or you have unexpected medical expenses, you don’t have to go into credit card debt to pay for it. Appropriate cash reserves are there to protect you from life’s unexpected events, like job loss, auto accidents, and medical emergencies. An adequate emergency fund is designed to keep you out of debt.

Prioritizing your kids’ education.

Paying for your kids’ college or private school education is a worthy and noble goal, but you need to make sure you have your Financial Order of Operations right before thinking about paying for school. Your child may be eligible for scholarships, federal aid, or other financial aid to pay for college. If they do need to take out loans to pay for college, they’ll still have decades of compounding growth ahead of them by the time their loans are paid off. There are no retiree loans if you don’t save enough for retirement. Make sure you have your own financial future in order before worrying about the financial future of your children.

Paying off your mortgage.

How can paying off debt be a mistake? Although shedding debt is a good thing, it may not be financially optimal to pay off your mortgage early. Make sure your dollars aren’t best deployed elsewhere, like in an emergency fund or in a retirement account, and follow the Financial Order of Operations. If you are younger with decades of compounding growth ahead of you, it may not make sense to prioritize paying off your house over other financial goals like saving for retirement. On the other hand, if you’re older and nearing retirement, you might want to make sure your house is paid off before you retire.

Not implementing appropriate risk management.

If you haven’t reviewed your insurance policies in a few years, it’s always a good idea to review your coverages and see if anything is missing. Review your life insurance need; not everyone needs coverage, and if no one is financially dependent on you or you are self-insured, you may not need life insurance. It’s important to make sure your estate plan accurately reflects your wishes, and if it hasn’t been updated in a few years you may need to make some changes if you’ve experienced any major life events.

The coronavirus pandemic poses risk to everyone, but we think there are different risks depending on your age. Check out our latest show, “Financial Pitfalls to Avoid During a Pandemic! (By Age),” for the risks you need to be on the lookout for during the coronavirus pandemic.

Watch out for the potential financial pitfalls brought on by this global pandemic! The Money Guy Show is committed to helping you keep your finances on track at every age, in every situation. Whether you’re 20, 30, 40, or 50, there are unique financial pitfalls either created or exacerbated by COVID-19. This episode lets you learn more about them, so you can avoid trouble and spread the word!

In this episode, you’ll learn:

• How to factor in your life circumstances as you prepare for the next unknown
• What financial goals you should prioritize at your stage of life
• How to continue handling the CARES Act (stimulus) provisions in a wise manner
• How to adjust your financial goals in the midst of a pandemic
• How to gain perspective and appreciate your season of life, no matter your circumstances

Research and resources from this episode:

• Stimulus Checks: How to Maximize Your Money (Money Guy Show)
• Here’s a top reason Americans are carrying an average credit card balance of over $6,200 (USA Today)
• My Retirement Plan is You (NYT)

Enjoy the Show?

• Get FREE downloads full of financial advice from our Resource Page!
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• Leave us a review on Apple Podcasts.
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The coronavirus pandemic is causing great emotional, mental, and financial challenges for many Americans. Some things are out of our control; you may not be able to control whether or not you lose your job, but you can turn a challenge into an opportunity. You may not be able to control how much time you are forced to spend indoors due to the pandemic, but there are ways you can make the most out of your time. Here’s how you can turn several coronavirus challenges into opportunities.

Dealing with job loss

Millions of Americans have either temporarily or permanently lost their job in the past month. The economy remains shut down in many sectors across the country. Job loss from coronavirus has been unexpected and sudden. Nobody really wants to lose their job; if you disliked your job enough, you would just quit. However, unexpected job loss due to coronavirus could be turned into an opportunity for many Americans.

As many as 63% of people are unhappy with their job. These workers aren’t necessarily unhappy enough to quit, but they may be happier doing something else. It’s safe to say that millions of workers who just lost their jobs were part of that group. As bad as job loss is, it may provide you with an opportunity to explore interests that you wouldn’t have otherwise had. 

If you aren’t sure when you’ll be able to go back to work, spend some time in quarantine exploring what you like to do. The average American changes jobs about 10 to 15 times in their life, and it is never too late to go back to school or try out a different career.

An opportunity to build relationships

Not many people enjoy being stuck inside, unable to go to restaurants, movies, or gyms, but your time in quarantine can be beneficial. You’ll likely be spending more time with the members of your household than you ever have. This can give you the opportunity to further build on the important relationships with the ones you love the most. Normally, you may only see your partner or other members of your household when you’re both home from work for a few hours in the evening. Spending most of your time together indoors gives you plenty of opportunities to re-connect and build your relationship, but don’t forget to take time for yourself in a different room from time to time. Extra time together is great, but you shouldn’t be together 24/7, no matter how much you love the other person.

Dealing with investment loss

If you have any substantial sum of money invested in the market, you’ve probably watched your investments decline in value over the past few months. It is never fun to watch your portfolio lose value, especially if you are closer to retirement, but now is a great time to re-evaluate your investments. Start by comparing the return of your portfolio to the return of the market; if your portfolio went down more or the same as the market, you may need to re-evaluate your risk tolerance. A well-designed portfolio should capture most of the market upside, but not as much of the downside. For example, if your portfolio captures 80% of the market’s gains, in an ideal world it should capture less than 80% of the market’s losses.

It is easy to have a high risk tolerance when the market is going up, but more difficult when the market declines. If your portfolio recently dropped more than you can stomach, you may need to re-evaluate your risk tolerance.

The market downturn makes an even stronger case for investing early and often. You may not be able to time the market, but you do have the chance to invest money into the market at a price lower than it was a few months or even a year ago. Bull markets are normally substantially longer than bear markets, so when a bear market does come around it can be a great opportunity to invest at a lower cost than you would have otherwise.

Many Americans are facing more financial adversity than they ever have, with job loss, the market downturn, and the closure of many small businesses. Our latest show, “5 Ways You Can Overcome Financial Adversity During a Pandemic!,” provides you the tools needed to overcome that adversity. Watch it now on YouTube below.

How can you maximize the money available to you through the CARES Act? This legislation is a fluid situation, but through lots of research, we broke down exactly how you can take advantage of these new benefits. Whether you’re an individual or a small business, there are provisions you need to be aware of and instructions you need to keep in the forefront of your mind. We walk through every detail we could uncover in this episode.

In this episode, you’ll learn:

• What rebates do you qualify for and how much?
• Should you take advantage of these benefits?
• Are there any drawbacks?
• How do you apply?
• What’s the best strategy for my business?
• What impact does it have on your retirement savings?

Research and resources from this episode:

• Everything You Need to Know About the $2 Trillion Stimulus Package (Money Guy)
• Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
• Business Loan Program Temporary Changes; Paycheck Protection Program (SBA)
• Paycheck Protection Program Borrower Application Form (SBA)

Enjoy the Show?

• Get FREE downloads full of financial advice from our Resource Page!
• Subscribe on YouTube or wherever you listen to podcasts.
• Leave us a review on Apple Podcasts.
• Send us your questions or share your story.

If you have any questions (or just want to say hi!), join the conversation on Facebook, Twitter, or Instagram!

The largest relief package in American history was recently signed into law by President Trump. The stimulus bill will provide much needed aid to Americans and businesses suffering economic loss as a result of the coronavirus. Millions of Americans have lost their jobs over the past few weeks, and businesses across the country have been forced to shut down, temporarily or permanently, due to the coronavirus. Whether you’re recently unemployed, just retired, or are only wondering about the stimulus checks, here’s what you need to know about the coronavirus stimulus bill.

Eligibility for recovery rebates

Most Americans will be eligible for a full or partial recovery rebate. For an individual, the maximum rebate is $1,200 and for a married couple it is $2,400. For every qualifying child age 16 or under, you may receive an additional $500. Not everyone will qualify for a rebate, and income is not the only excluding factor. These groups may also be ineligible for a rebate:

• Adults who can be claimed as dependents.
• Children age 17 or 18.
• Many college students age 19-23.
• Taxpayers who file using an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number.
• People who haven’t filed 2018 or 2019 tax returns.
• Estates.
• Individuals with an AGI greater than $99,000 or married filing jointly taxpayers with an income greater than $198,000.

We aren’t exactly sure when the stimulus rebates will arrive, but Treasury Secretary Steve Mnuchin says the money should start going out in the next few weeks. If you still aren’t sure if you’re getting a rebate (or how much you’re getting), you can use our flowchart below to see if you may be eligible for a recovery rebate.

RMDs may be deferred

The stimulus bill will allow many Americans with required minimum distributions (RMDs) to defer those RMDs if they so wish. This is great news for retirees who don’t need to take RMDs but would otherwise be required to. The broad stock market is down over 20% this year, and withdrawing money from a retirement account when the market is down can be especially harmful to the portfolios of retirees. 

To qualify for deferring RMDs, you, your spouse, or a dependent must be diagnosed with COVID-19 or suffer adverse financial consequences from conditions related to coronavirus. This includes being quarantined, furloughed, laid off, reduced business hours, or being unable to work for other reasons. This list is not all-inclusive, so many Americans should be able to qualify to defer RMDs if they wish.

Relaxed withdrawal rules

If you are eligible to defer RMDs, you may also be eligible to take an aggregate distribution of up to $100,000 from all retirement accounts without the normal 10% early withdrawal penalty. This is only applicable to distributions taken in 2020. The income tax on distributions may also be spread evenly over three years or it may be repaid to an eligible retirement plan within three years. Rules for loans from retirement plans have also been modified for 2020, and loan repayments may now be delayed for one year.

Charitable deductions

The new stimulus bill has great news for charitable organizations and taxpayers who take the standard deduction: a new above-the-line charitable contribution deduction of up to $300. Taxpayers will be able to claim up to $300 in cash contributions without itemizing on their 2020 tax return. Cash contributions for those itemizing deductions can now be up to 100% of AGI for 2020 instead of the previous limit of 60%.

Unemployment compensation

The new bill significantly expands unemployment compensation to provide relief to millions of Americans that recently lost their jobs. Self-employed and part-time workers may now qualify for benefits under the expanded program. Gig workers, freelancers, and independent contractors are included as self-employed workers. Eligible workers will receive an additional $600 per week from the federal government in addition to any state benefits they are eligible to receive. 

Unemployment benefits will also last longer than usual; the bill provides workers with an additional 13 weeks of compensation, and many states offer 26 weeks of unemployment compensation, which means eligible workers may be covered for up to 39 weeks. For more information on benefits and to file a claim, you will need to contact your state unemployment office.

Student loan relief

Americans with federal student loans may be eligible to defer payments until September 30, 2020. No interest will accrue during this period, either. (Note: this does not apply to private student loans, only federal loans.) Many borrowers have recently lost their job, and this student loan relief will help free-up additional money in their monthly budget at a time when it is needed the most. Borrowers who are able to continue making payments may want to consider doing so to get their debt paid off earlier.

Healthcare benefits

If you have an HSA or an FSA, you may benefit from an expanded definition of medical expenses. Funds may now be used for feminine products and over-the-counter medications like Tylenol. Insurance policies that offer coverage for tele-health services must now waive deductible requirements. The deadline for 2019 contributions to an HSA or FSA has been extended as well, until July 15th, the same date as the deadline for 2019 contributions to IRAs and as the tax-filing deadline.

Our most recent show, “Stimulus Checks: How to Maximize Your Money (Important Information),” covers benefits available to businesses as well as benefits and planning opportunities for individuals. Watch it now on YouTube below.

Many businesses have been forced to close down during the coronavirus outbreak and some may never reopen. As a result, millions of Americans are temporarily unemployed. The largest stimulus bill in U.S. history was recently signed into law, and for some Americans relief can’t arrive soon enough. Unfortunately there are people and companies out there looking to take advantage of the desperation that many people are feeling right now. Some of these rip-offs and scams can be hard to recognize since they’re so new. Here’s what you need to look out for and avoid during the coronavirus outbreak.

Stimulus check scams

The stimulus bill that was just signed into law is sending many Americans direct relief in the form of a direct deposit or a check from the federal government. According to the IRS, no action is required for most people. However, some seniors and others who do not typically file a tax return will need to file a simple tax return to receive the stimulus payment. Money should start going out in the next few weeks, according to Treasury Secretary Steve Mnuchin.

Be very wary of anyone claiming to work for the government or IRS asking for your personal information. They may try to use the recovery rebate as leverage to get your information or steal your identity. For example, they may say something like “We just need to confirm your bank account information to ensure there are no delays in sending your stimulus check.” Never provide your personal information to anyone unless you can verify who they are and who they’re working for. If you receive a call from someone claiming to be from the IRS or your bank, you can always hang up and call them back. By calling the official number listed on their website or your bank statement you can ensure you are talking to who you think you’re talking to.

Most Americans will receive a partial or full recovery rebate. If you aren’t sure how much you’ll receive or if you’ll receive anything at all, you can use the flowchart we created below to help determine what you may be eligible to receive.

Predatory loans

Many Americans that recently became unemployed need money quickly to pay for housing, food, and other living expenses. There are some lending companies offering loans to those in need, but every other option available should be evaluated before taking out a loan.

The federal government recently expanded unemployment compensation with the stimulus bill, so many people, including self-employed, who lost their income or job will qualify for unemployment compensation. There are also now more options available for those who are forced to withdraw money from retirement accounts to pay for expenses. If you are currently making payments on a federal student loan, you may be able to temporarily stop making payments until September 30th, 2020 if you need extra money to pay for living expenses.

If you are struggling to make your mortgage payment or rent payment, it is worth talking with your bank or landlord directly to see what options are available to you. There are also resources out there if you are having trouble paying for groceries, utility bills, and other expenses. Check with your local governmental authority for information on programs that help those in need of assistance.

If you or anyone you know is considering taking out a loan to pay for expenses they can no longer afford, make sure they are aware of the terms of the loan, interest rate, and any other options that may be available to them. There are companies offering short-term loans to pay rent with interest rates as high as 99.99%, and that doesn’t include the additional fees they charge when the loan is disbursed. Taking out a temporary loan to pay for expenses may not seem like a bad idea now, but the financial consequences down the road could be very harmful.

Fear-based purchases

Anyone that has shopped at a grocery store in the last month has witnessed fear-based purchases being made. We are living in uncertain times, and some people are coping by stocking up on food and toilet paper. When we are faced with a situation we can’t control, like the coronavirus outbreak, we will do anything we can to get that feeling of control back.

There is no need to buy an excessive amount of food or toilet paper. We have an incredibly strong supply chain, and empty shelves in grocery stores are not caused by shortages but by people hoarding more goods than they need. Only purchase what you need until the next time you visit the store to make sure you’re leaving enough for your neighbors. Many fear-based purchases are both unnecessary and a waste of money.

There are some companies and people out there who will inevitably take advantage of that fear and desire to be in control by offering a solution. One televangelist is now being sued by the state of Missouri for selling a fake coronavirus cure. Beware of any purchases made out of fear, and make sure you’re buying things for the right reasons. The CDC has provided guidelines to slow the spread of the coronavirus, and your local, state, and federal health agencies will provide the best information and guidance on the outbreak.

We recently unpacked the recent coronavirus stimulus bill in our latest “Ask The Money Guy” episode and answered a bunch of questions related to the bill. Watch “Coronavirus Stimulus Bill: What You Need To Know” on YouTube below for information on the stimulus bill and how it may affect your finances.

A huge legislation just passed called the CARES Act. This new stimulus bill promises to ease the extra financial burden brought on by the coronavirus. In case you don’t have time to read and decode a 335 page bill, we did it for you! Let’s unpack what you need to know about the CARES Act and how it affects your personal finances.

In this episode, you’ll learn:

• How much money you can expect to receive from the government
• How to get your stimulus check
• New benefits available for people with student loans, retirees, and people who are unemployed.
• How the Payroll Protection Program can save your job or small business
• What options are available to help small businesses stay afloat during quarantine

Research and resources from this episode:

• Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

Enjoy the Show?

• Get FREE downloads full of financial advice from our Resource Page!
• Subscribe on YouTube or wherever you listen to podcasts.
• Leave us a review on Apple Podcasts.
• Send us your questions or share your story.

If you have any questions (or just want to say hi!), join the conversation on Facebook, Twitter, or Instagram!

No one can predict a global pandemic, and it’s just as difficult to predict what impact it may have on the economy and financial world. It is difficult to sit idly by during the current market volatility and do nothing. After all, as we know from Warren Buffett, volatility can create opportunity. Not every piece of news is actionable, though, and not every movement in the financial world requires an equal and opposite reaction.

The danger of overreacting

There may be just as much danger in overreacting as there is in doing nothing and underreacting. Data from FRED shows that money flowing into money market funds was at a near high in the fourth quarter of 2008, at the same time the S&P 500 was close to bottoming out. This means that many Americans took much or all of their money out of the market at the bottom. Many Americans may be in danger of doing the same thing this year.

In an ideal world, we would simply move all of our money out of the market at the peak, and move everything back into the market at the bottom. In reality, that’s impossible. Trying to time the market can cause a much greater financial loss than simply riding it out and staying in the market. Overreacting to moves in the stock market can be harmful to your financial health. In many situations, it’s better to do nothing at all than to overreact.

There are several financial planning opportunities that can arise amidst market volatility. Now could be a great time to move out of positions that you no longer have a gain in or positions that you now have a loss in, known as tax-loss harvesting.

Tax-loss harvesting

Tax-loss harvesting is the practice of selling a security that has a loss. By realizing losses, investors may offset taxes on gains and/or income. You can think of harvesting losses as making the most out of a bad situation. No one wants the value of their investments to drop, but if they do you may want to take advantage of the tax benefits that come along with realizing a loss.

Buying opportunities

We don’t know when or where the bottom of this market is going to be. We don’t know if it’s weeks or months away, or if it’s already happened. We do know that a significant portion of the gains in a bull market occur early in the rally. Nobody wants to miss out on the beginning of a bull market, but trying to time the market could mean exactly that, missing out. If you take your money out of the market when volatility hits, you risk taking your money out at the bottom or near the bottom of the market. If you wait until the next bull market begins to put your money back in the market, you risk missing out on some of the greatest and most substantial market returns.

Dollar cost averaging can be even more impactful than usual during times of market volatility. Averaging into the market makes it easier to get out of your own way; there’s no guessing where the bottom or the top is, and no concern with when to invest.

Is your emergency fund big enough?

For some, now may be the first time they have lost a job and will be the first true test of their emergency fund. Now is a better time than any to reconsider how big your emergency fund is. When things are going well, it’s easy to feel like you can get away with keeping very little cash on hand for emergencies. It’s not until times are tougher that the true value of an emergency fund is realized.

This is not to say that you need to hoard cash in a large emergency fund, but having enough cash on hand to make it through an emergency like the loss of a job could save you from having to tap into your retirement savings or use a credit card. The general rule of thumb for emergency funds is to keep between 3-6 months worth of expenses in an online, high-yield savings account. For those at greater risk to job loss, that amount may need to be greater.

The coronavirus outbreak has shown us that some industries can experience substantial growth while others experience substantial job loss. Grocery and restaurant delivery services have exploded in popularity since a huge portion of the population is staying inside their home. Online retailers such as Amazon are also experiencing a surge in demand, as are many brick-and-mortar grocery stores. Jobs we may not have thought of as essential before, like package delivery workers and grocery clerks, are showing just how essential they are to the American economy.

Are you at the right level of risk?

Now is also a greater time than any to reevaluate your risk tolerance. When times are good, like they have been for the last decade, some fall into the trap of taking on more risk than they can handle. When it seems like the market is constantly going up, the fear of missing out on big gains often outweighs the fear of market volatility.

The fear of market volatility has been much realer recently, which means it’s a good time to scrutinize your preferred level of risk. How does the recent market decline feel? Do you think you would be able to stomach a sharper decline, or is it hard to stomach this decline? It may not be the best idea to change your level of risk in the middle of a market decline, but you should take note of how you react to this decline and subsequent recovery. Your risk tolerance will not change, but the market decline may reveal that your risk tolerance wasn’t as high or as low as you thought it was.

We’re committed to creating the content and financial information you need throughout the coronavirus outbreak, and this week’s show has even more information on how to financially handle the coronavirus. Watch our latest show, “The BEST Financial Strategy During the COVID-19 Pandemic,” on YouTube below.

In the midst of the recent coronavirus market volatility, we realized, we’ve been here before. When you live through a market downturn, you walk away wiser, and full of new planning strategies to help you prepare for your next unexpected life event. In this episode, we walk through financial planning opportunities you can take advantage of in the middle of this uncertainty, then shift our focus on how to prepare for the next one.

Life presents us with a lot of things we can’t control, but we can learn from the hard times and walk away more prepared for the future.

In this episode:

• How to deal with your emotions in the midst of market volatility
• Why you should take advantage of strategies like dollar cost averaging, loss harvesting, and more right now
• Specific ways you can prepare yourself and your portfolio for future emergencies

Research and resources from this episode:

• 5 Ways to Deal with Investment Uncertainty (The Money Guy Show)

Enjoy the Show?

• Get FREE downloads full of financial advice from our Resource Page!
• Subscribe on YouTube or wherever you listen to podcasts.
• Leave us a review on Apple Podcasts.
• Send us your questions or share your story.

If you have any questions (or just want to say hi!), join the conversation on Facebook, Twitter, or Instagram!

Our world is changing rapidly! We want to help you break down the changes that have happened over the past week and hone-in on how each one affects your finances. How should you respond to these economic and emotional fluctuations? We talk through it in this week’s Q&A episode.

In this episode, you’ll learn:

• How to tell if your financial plan can weather the storm
• What policy changes are now in place and how they affect your finances
• Where you are in the Cycle of Market emotions and what’s coming next

Research and resources from this episode:

• Delivering on President Trump’s Promise, Secretary DeVos Suspends Federal Student Loan Payments, Waives Interest During National Emergency (U.S. Department of Education)
• Tax Day now July 15: Treasury, IRS extend filing deadline and federal tax payments regardless of amount owed (IRS)
• Will I ever have more than I put in? (Bogleheads.org)