The Essentials of Evaluating Your Budge

By Michael Hall

Eliminate or Reduce Nice-to-Haves: If you’re in disaster or emergency budgeting mode, prioritizing your expenses matters. For example, paying the rent or your mortgage and keeping the lights on should naturally take precedence over buying new clothes.

Ordinarily, removing these things from your budget might be painful. But if you’re currently under a shelter in place order or you’re simply being diligent about social distancing and staying home, then cutting out these expenses may be less of an ordeal.

Another nice-to-have expense category to cut is anything that’s outsourced. For example, if you pay someone for lawn care or dry cleaning, those are expenses you could temporarily put on pause. The goal is to trim as much of the fat as possible from your budget to preserve as much of your income and savings as possible.

Revisit Your Essential Spending: Once you’ve cut the fluff out of your budget, you can take a second look at your essential spending.

Start with what’s likely your biggest expense, which is housing. If you are having trouble paying your rent, contact your rental company to let them know.  Although your options for managing rent payments may be limited to state and local support, the good news is that in the state of New York, the moratorium on evictions has been extended.   Ideally, you should continue paying rent on time each month. But if you can’t because your income has taken a hard hit, you may be insulated from legal action, at least in the short term.

You should speak with a financial counselor to determine what resources, if any, are available to you to help cover your housing costs.

Similarly, many utility companies are suspending disconnections for nonpayment while states and municipalities fight against COVID-19. So if you can’t pay these expenses you won’t lose service, although you will have to get caught up on them at some point.

Also, pay attention to what you can do to make your debt load more manageable when cash is short. The coronavirus stimulus package provides relief for federal student loan borrowers including the temporary suspension of payments through September.  We do not know if this will be extended and doesn’t apply to private student loans, however. If you have private loans, you’ll want to reach out to your loan servicer to see whether a deferment or forbearance is possible.

Likewise, stay in touch with your credit card issuers as well. Many credit card companies offer hardship programs that allow you to lower or suspend your payments or reduce your interest rate for a set time period. This can make paying down your balance more affordable when money is tight.

Michael Hall is a financial counselor with Bedford Stuyvesant Restoration Corporation. As a financial counselor he helps individuals allocate their funds better, deal with debt, weigh in on legal options, and even save for a rainy day. If you’re in debt or have no credit and need help, a reputable credit counseling organization, like the Office of Financial Empowerment through NYC Office of Consumer Affairs might be able to help. To schedule a financial counseling appointment, go to: www.nyc.gov/talkmoney or call 718-636-6900 and ask for Michael Hall.