5 Things you need to do to reduce your financial stress during COVID-19

After looking at what payments you are eligible for, you now need to tighten up your budget to help you through the next 6 months. This will allow you to look after your mental health by reducing your financial stress.

We talk about this all the time with our Humblebee Financial Planning clients. You need to be sitting down right now and seeing where your money’s going and look at things you can reduce or live without for immediate future.

  1. Talk to your bank. Most banks are offering relief for mortgage holders in the form of either payment holidays, freezing your mortgage for six months or reducing your mortgage repayment by 50% . You can really have a good conversation with them. Most banks’ websites currently have links to their COVID-19 relief package, and you can go through there and read all the different details.

We did a video on our Facebook about it with Paul Fox from Fox Mortgages, who’s a mortgage broker – you can watch it here – He contacted every bank and there’s a few things that you need to be asking.

  • What happens to the payments once they’ve been frozen?
  • Do you need to pay them at the end?
  • How do the repayments work – if they freeze it for six months, do you need to make a full payment in month seven? Or are they going to add it on to the end of your loan?
  • Are they going to extend your term?
  • Also, does this get recorded on your credit file as a missed payment?

 Just ask what they can do for you, see how they can help, run through your scenario with them. They are there to help. Because the big thing they want is in six months’ time when you’re back in work, they want you to still be in that house, still paying that mortgage. That’s what they want. They don’t want you to default.

  • Contact utility providers and ask about payment plans. So, if you’re contacting any of your electricity companies or your gas companies or anyone else, give them a call, even your phone and internet providers, do the same with them. Get on the front foot, have a chat, say, “I’ve lost my job, I don’t have money coming in. What can we do? Can you put me on a payment plan? Can I reduce what I’m on or reduce what I’m doing?” And just see what they can do.
  • Talk to your Insurance provider. Some insurances as well are offering freezes for three months, so things like health insurance, some personal insurances like life insurance, income protection, they all work on a case by case basis. It’s about you being able to get in touch with them and let them know. Just remember with that, you won’t be able to make a claim whilst you’re on a payment holiday. Just remember, the insurance goes, freezes, you basically no longer have that insurance for those three months, so you can’t make a claim.
  • Talk to anyone that you’re currently having to pay, I would be calling them and seeing what you can do and seeing what you can work out. Be reasonable, and hopefully they’ll be reasonable with you as well.
  • Cancel Subscriptions you don’t need. This isn’t for long term but you need to focus on what you can do now to reduce your expenses. This is probably going to be pretty short term pain we see it. It’s probably going to be 2-3 months before anything starts moving again and starts actually getting people back into work.

If you struggle on where to start with your budget jump into our 5 days of budgeting tips and strategies in our Budget Bootcamp.