Coping Financially in Uncertain Times
Becky Smith, Ph.D. FFC ©
Director, MSU Extension Center for Economic Education and Financial Literacy
State Specialist Family Financial Management
Assistant Extension Professor, Community Economic Development
Dept. Agricultural Economics, Mississipp State University
becky.smith@msstate.edu
Introduction
Financial Well-Being is defined as having financial security and the freedom of choice in the present and in the future. The economic implications of the “Affordability Crisis” are adding to the already precarious situation many Mississippians find themselves in financially. This toolkit provides information and resources to help individuals and families stabilize and/or improve their financial well-being as they weather loss of income and uncertainty in the economy and financial markets as well as help consumers protect themselves now and position themselves for a stronger financial future.
Try Not to Freak Out
Be intentional about being calm. The existential threat of economic downturns and financial uncertainty triggers panic and a “scarcity” mindset. When we panic, we tend to lose perspective and focus too narrowly on a problem, often making things worse. Staying calm and managing stress takes time and effort but will be worth it. When feelings of panic or anxiety set in, take a moment to control your breathing. Take deep breaths and hold them momentarily, giving yourself time for those feelings of panic and anxiety to subside. We can take breaks from the news. We can stretch and move our bodies, eat more healthily, and get plenty of sleep. We can share our feelings and experiences by connecting with friends and family digitally. Here are additional ways to proactively manage stress and anxiety.
Remember that Our Financial Resources are Just One of our Resources. When we think of “resources,” we often limit ourselves to thinking about our bank accounts and other financial resources. However, our other resources can be utilized to keep us going through tough times, and some can be used to build financial resources. Think about your social network and support systems, your faith, your grit and desire to make it, your ability to adapt, as well as your mental, physical, and spiritual strength. Drawing on our inner and outer resources allows us to take action, which is an essential human need in times of crisis.
Resource on building a support network
Talk About It. Even in a stable, growing economy, money is a top stressor in our lives. For many people, money is also a taboo topic, so we often avoid dealing with it or we handle money conversations in an unhelpful way. While money disagreements are not the top source of marital conflict, they have been shown to be “more pervasive, problematic, and recurrent, and remained unresolved” (Papp et. Al., 2009). Realizing that each of us has a different “relationship” with money can be a helpful first step in improving communication around money issues. You can begin by asking yourself some of the following questions, while recognizing and appreciating others around you will have had different experiences:
- What is your “history” with money? How has your “history” developed and changed over time?
- What are your earliest memories (good and bad) of money as a child? What is your first memory regarding disagreements about money?
- How did your parents talk about money? How did your parents agree about how to deal with money?
Self-Assessments that help us understand our relationship with money and improve how we communicate about money:
Guidance for talking about money
Tips on how to talk with your kids about money
Booklets on bills, saving, debt, and credit to help get the money conversations going (can be downloaded for free or booklets ordered for free)
Remember Your Future Self. While we need to stabilize ourselves and our financial situation in the moment, don’t forget about your future self—we will want to spend money on the things we want in the future, too. Our economy is resilient has rebounded from many recessions. Additionally, there will be more recessions in the future. Using this opportunity to form a habit of saving and build an emergency fund and/or retirement fund will smooth out the sharp corners when income dips in the future. Even if it is a meager amount, keep adding to your emergency fund and retirement fund. Make other cuts first, if possible, or find new income streams. It is the habit of saving that matters, and once income goes back up, increase the size of these deposits. Even if you are not adding a lot, following through on adding to an emergency fund and continuing to contribute to your retirement gives confidence today that you will be ready for the future. This can give you the momentum you need to get through difficult spots today.
Emergency Fund
Emergency funds are the foundation of having peace of mind when it comes to our finances. The goal is to get to three-to-six months of expenditures. That may seem like an impossible goal, but begin with what you can, even $10 a week will make a big difference. Emergency funds keep us from paying interest on borrowed funds, from relying on payday loans and pawn shops, and from borrowing from friends and family.
Emergency funds should be kept in their own account--separate from checking accounts which are best used for paying bills. When a real emergency happens and you must spend from the account, set up a regular payment over a reasonable period of time to pay back your emergency fund to keep it whole.
America Saves helps Americans set savings goals and follow through to reach them.
Learn how to meet savings goals
Consumer Protection
We need to stay vigilant in protecting ourselves with today’s digital economy. However, it is extra important during times of uncertainty when people are more vulnerable. Remember, if it seems too good to be true, it probably is.
Money Management when Income Drops
When income drops, act sooner rather than later. When we are panicked, we are more likely to make mistakes and sometimes we go into denial and avoid making changes we know we need to. Sometimes, we make it worse with “retail therapy.” Our future self will be better off when we lean into the discomfort to deal with the new reality.
Below you will find steps to take and resources to help you. Try to stay out of a “scarcity mindset” (see sections above) and do what you can now. Then, come back to it and make more progress. Repeat.
Now is the time to think about what can be cut out for a time and find cheaper ways to entertain ourselves. Remember that it won’t be forever. Use a bill calendar to prioritize monthly bills and when they are due. Create a budget by listing income and monthly bills.
Let your creditors know before you miss a payment. Many people find talking to others about their tight financial situations very difficult. Remember that we are all human and in this together. Creditors are more willing to work with borrowers who communicate and demonstrate intentions of paying off debt, even if it takes longer. However, recognize that creditors may only “assist” you for a short period of time.
Contact your creditors directly with “proof of impact” to see if you qualify for hardship support. This applies to all of your major bills—rent/mortgage, car loan, credit cards, utilities, phone, insurance—they cannot help if you do not ask.
Find new income streams. Use your creativity to find ways to “monetize” your skills with what others would value. Be willing to do what others are not. Find ways to build your skills now so that you will be ready for employment when hiring begins again. Career One Stop has resources for career exploration, training, and jobs.
If possible, avoid using payday loans, title loans, or pawn shops by using the resources below.
Finding Help
A good place to begin is call “211” on your phone or visit Call 211 to connect with local health and human services resources in your community, including food, housing, and utilities and other financial assistance.
Mississippi Department of Human Services Division of Community Services provides an array of services for elderly, disabled, low-income individuals and families, and families with children in local communities. Though the Need Help Paying Bills site has advertisements and sponsorships, it offers a nice collection of resources, including those specific to Mississippi.
Many communities have local non-profit organizations that support individuals in times of need. Look for advertisements in local papers and social media platforms on services or events from local faith communities and civic organizations. Links for the Cajun Army and The Salvation Army.
Community Counseling Services provides comprehensive mental and behavioral health services.
The National Council on Aging can help older Mississippians learn about what public and private benefits programs to save money.
Food
Mississippi Food Network connects Mississippians to local food banks.
The government provides online applications to a variety of assistance programs:
- Medicaid: health coverage
- Supplemental Nutrition Assistance Program (SNAP): food support
- Temporary Assistance for Needy Families(TANF): income support
- Low-Income Home Energy Assistance Program (LIHEAP): energy cost assistance
The current federal government shutdown has interrupted SNAP benefit distribution. MS Department of Health and Human Services distributes SNAP for Mississippi.
Housing
If you are having trouble paying your rent or mortgage, contact your landlord or bank or credit union right away. Delaying makes things worse. Explain your situation, get a new plan in writing, keep communicating as situations change.
Housing assistance can be found at the HUD Exchange, open shelters can be found at the Red Cross Find Open Shelters and by calling 800-733-2767.
Mississippi Home Corp works to increase the quality and affordability of the housing stock available to low- and moderate-income Mississippians.
Utilities
Local utilities offer deferred payment plans or hardship assistance. Contact your provider directly to let them know of your situation and work out a plan. Call the customer service number listed on your utility bill to discuss payment arrangements with your specific provider. The Mississippi Public Service Commission has links to Mississippi Power, Entergy, Atmos, and CenterPoint’s payment assistance plans.
Unemployment Benefits
File for unemployment in Mississippi
Additional Reading
Coping Financially with Disasters
Health Insurance
Being furloughed means you will likely be able to continue paying for health insurance—check with your employer to see how to make contributions while going without a paycheck.
Being laid off normally means health benefits end. You have two main options for health insurance if you have been laid off. You can pay to continue your employer’s plan through COBRA for three years.
A cheaper option is likely to be through Heathcare.gov known as Obamacare. The registration process will tell you if you qualify for Medicaid or Children’s Health Insurance Plan (CHIP).
Help for Federal Employees
The Federal Employee Education and Assistance Fund is a non-profit offering emergency hardship loans for federal employees facing a personal crisis and may activate a shutdown grant program if a shutdown causes a missed paycheck. Partnership for Public Service has updated information and links to programs for federal employees. USAA is offering eligible members no-interest loans.
Federal employees are typically guaranteed back pay after a shutdown. Any unemployment benefits received during a furlough or shutdown will need to be repaid.
Apply for benefits in Mississippi
The Congressional Federal Credit Union offers several kinds of stability assistance programs, including relief lines of credit. One must be a member.
Help for Military
Military One Source is free, confidential support for service members and their families, offering 24/7 access to non-medical counseling, financial and legal resources, spouse education and career guidance, relocation assistance, and more.
Learn a variety of topics important to both military and non-military in these webinars.
USAA is offering eligible members no-interest loans.
Investing in Uncertain Times
The volatility and downward swing of stock markets can create a lot of anxiety as investors watch the value of their investments fall. Stock markets are inherently volatile, and people lose when they try and “time the market.” Downturns are normal parts of a working market economy. Throughout history, we have experienced downturns due to wars, high oil prices, financial crises, and outbreaks of contagious diseases. When we see these sharp downturns, our first inclination is often to sell before prices fall any further. However, selling when the market is at a low point is not advisable, as it locks in potential losses. Lower stock prices make them a better value. Low stock prices mean that we can buy stocks “on sale.” Warren Buffet popularized this idea: “Be fearful when others are greedy and be greedy when others are fearful.”
When investing, keep a long-run perspective and diversify by buying mutual funds which are groups of stocks so that we “do not put all of our eggs into one basket.” The overall trend of the stock market is upward with stocks of small and large companies returning over ten percent. This compares to rates of return of government bonds around five percent and Treasury bills near three percent with inflation about two and half percent. Having a plan to ahead of time that incorporates market volatility protects us from losing significant value of our assets, including retirement savings. Disclaimer: do not invest money you cannot afford to lose. Do not invest at the risk of meeting your current financial obligations.
The older we get, we want to keep less of our investment portfolio in stocks so that when a downturn happens, we don’t lose the majority of the value of our assets right when we need to use the money. As such, you will want to “rebalance” your portfolio to reduce the amount held in stocks and increase the amount held in bonds. Young people can hold more of their investments in stocks because they have a more time for the market to recover from a downturn. When investing on a consistent basis, these investors can take advantage of lower prices for stocks to create potentially greater return in the future. It is also strongly recommended that everyone “diversifies” their investments through buying a variety of stocks and bonds so that we “don’t put all of our eggs in one basket.”
There are many places to learn more about investing.
FINRA Investor Education Foundation: SaveAndInvest
Financial Education, Financial Coaching, Financial Advice
When looking for someone to help you manage your finances, look for someone who is a “fiduciary.” A fiduciary is someone who must put the interest of the client first. While this might seem like a no-brainer, remember that people go into business to make a profit, and some are willing to do this at the expense of a client’s best interest. Having a plan for emergency funds, life insurance, disability insurance, and estate planning before a crisis occurs makes living through one much smoother.
Financial Educators
Financial educators are not trained to give financial advice, but they can help you create a budget, brainstorm local resources, and make referrals. If you would like to get in touch with an MSU Extension educator, contact your local office or Dr. Becky Smith.
Financial Counselors / Financial Coaches
Financial counselors and coaches help people manage debt, improve their credit, and help clarify future goals and steps to achieve those goals. Avoid people and businesses that charge for “credit repair.” Instead, find credible financial counselors here:
- Association for Financial Counseling, Planning, and Education (AFCPE)
- National Foundation for Credit Counseling (NFCC)
- Money Management International
Financial Advisors
Financial advisors help people manage assets and prepare for retirement. Look for Certified Financial Planners (CFP®), who are “fee only” rather than charge on commission; avoid financial advisors who make money by selling you products they have a vested interest in. Search Fee Only financial advisors who are members of the National Association of Personal Financial Advisors (NAPFA).
General Financial Education
Consumer Finance Protection Bureau’s Consumer Tools help with decisions involving money.
Consumer Financial Protection Bureau: 43 tools and fillable handouts
Dr. Barb O’Neill, Ph.D., AFC, CFP Money Talk blog on personal finance.
Money Talks is a radio program airing Tuesdays at 9:00am on Mississippi Public Broadcasting focusing on personal finances with recordings of past episodes.
Extension’s Financial Security for All
The national Extension community of practice Financial Security for All has helpful information and webinars on a variety of topics.
Legal Aid
Legal Aid Resources in Mississippi is a website with several outreach programs for Mississippians. The Mississippi Bar has educational resources for the public as well as a lawyer search tool. In Legal Terms is a weekly show on Mississippi Public Broadcasting with recordings of past episodes.
Contacts
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Associate Extension Professor- Agricultural Economics