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Money worries during COVID-19? Six tips to keep your finances afloat


 

Even before Atlanta had an official shelter-in-place order, patients at the private plastic surgery practice of Nicholas Jones, MD, began canceling and rescheduled planned procedures.

After a few weeks, Dr. Jones, aged 40 years, stopped seeing patients entirely, but as a self-employed independent contractor, that means he’d lost most of his income. Dr. Jones still makes some money via a wound care job at a local nursing home, but he’s concerned that job may also be eliminated.

“I’m not hurting yet,” he said. “But I’m preparing for the worst possible scenario.”

In preparation, he and his fiancé have cut back on extraneous expenses like Uber Eats, magazine subscriptions, and streaming music services. Even though he has a 6-month emergency fund, Jones has reached out to utility companies, mortgage lenders, and student loan servicers to find out about any programs they offer to people who’ve suffered financially from the coronavirus crisis.

He’s also considered traveling to one of the COVID-19 epicenters – he has family in New Orleans and Chicago – to work in a hospital there. Jones has trauma experience and is double-boarded in general and plastic surgery.

“I could provide relief to those in need and also float through this troubled time with some financial relief,” he said.

Whereas much of the world’s attention has been on physicians who are on the front line and working around the clock in hospitals to help COVID-19 patients, thousands of other physicians are experiencing the opposite phenomenon – a slowdown or even stoppage of work (and income) altogether.

Many practices are temporarily closing to meet social distancing requirements, and some may end up closed for months, leaving doctors without a source of income. Even among those practices that remain open, the number of patients has declined as people avoid going to the office unless they absolutely have to.

At the same time, doctors in two-income households may have a spouse experiencing a job loss or income decline. Nearly 10 million Americans applied for unemployment benefits in the last 2 weeks of March, the largest number on record.

Still, while there’s uncertainty around how long the coronavirus crisis will last, experts agree that at some point America will return to a “new normal” and business operations will begin to reopen. For physicians experiencing a reduction in income who, like Jones, have an emergency fund with a few months’ worth of expenses, now’s the time to tap into it. (Or if you still have income, now’s the time to focus on growing that emergency fund to give yourself an even bigger safety net.)

If you’re among the more than half of Americans with less than 6 months of expenses saved for a rainy day, here’s how to stay afloat in the near term:

Cut back on expenses

Some household spending has naturally tapered off for many families because social distancing restrictions reduce spending on eating out, travel, and other leisure activities. But this is also an opportunity to look for other ways to reduce spending. Look through your credit card bills to see whether there are recurring payments you can cut, such as a payment to a gym that’s temporarily closed or a monthly subscription box that you don’t need.

Some gyms are not allowing membership termination right now, but it pays to ask. If a service you’re not using won’t facilitate the cancellation, call your credit card company to dispute and stop the charges, and report them to the Better Business Bureau.

You should also stop contributing to nonemergency savings accounts such as your retirement fund or your children’s college funds.

“A lot of people are hesitant to stop their automatic savings if they’ve been maxing out their 401(k) contribution or 529 accounts,” says Andrew Musbach, a certified financial planner and cofounder of MD Wealth Management in Chelsea, Mich. “But if you’re thinking long term, the reality is that missing a couple of months won’t make or break a plan. Cutting back on the amount you’re saving in the short term will increase your cash flow and is a good way to make ends meet.”

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