How can you utilize the social isolation time to gain financial advantage?
The deadly coronavirus has spread over 200 countries and has forced the entire planet population to take shelter in their home. Americans too as good citizens, are abiding by the rules and many have confined themselves voluntarily in their houses 24*7.
But the economy cannot be stopped due to this corona pandemic. Like the stream, the economy has its flow as well. In this topic, we are eager to discuss how you can use your present social isolation state to gain some financial advantages.
1 Live only in the budget-defined way
The TV news and newspapers have already made you aware that the circumstances around us are not so pleasurable. The US and world economy are gradually sinking. You are in an uncertain position currently while thinking about what will be the status of the job field after this pandemic period will be over. Whether the management will offer you a slashed paycheck or you have to find a new job.
Better, for the sake of the future, you should start living your life in a new way that is the budget-defined way. So, start calculating your budget to keep track of your spending and how much money you are going to save every month. In this upcoming tough economic situation, if you can save some extra dollars by living in a budget-defined way, it may come to your help in case of any emergency.
Are you thinking about how to plan a budget? You don’t have to toil much hard to manage personal finance. Nowadays, online budgeting apps are available in the market. For example, there are Mint, Mvelopes, Personal Capital, etc, all these budgeting apps have different characteristics. Try out any one of them that you think will be suitable for you to manage your personal finance.
So, when you are in a self-isolated state in your home, try to build your family budget on a strong base by taking the help of these applications.
Believe me, living your life in a budget-defined way will only give you financial advantages for the future.
2 Utilize this time to explore your future savings options for the post-retirement period
Till now, you were busy with your office work or your business. You might not have got enough time to think about your future savings .
So, when you have ample time in your hand now, chalk out plans of how you would like to save for your future.
A - 401(k):
You may choose the 401(k) plan. It is a government-approved retirement saving account where you can contribute a certain portion of your salary for long-term investment plans. Your employer too may match upto your contribution in the 401(k) account.
Why do you want to save in 401(k) for the post-retirement period?
- You will get several tax benefits under IRS guidelines if you contribute your retirement amount in the 401(k).
- The account is dedicated for your retirement-purpose savings only. Federal govt. has strict rules; so, withdrawing money is not easy from the 401(k) account.
The rule says if you want to withdraw your amount before 59 ½ years of age, then you have to pay off a heavy penalty.
B - 403(b):
If you are working in the US health department, education department or you are a direct government employee, then the 403(b) account is ideally created for you.
The benefits and rules are almost the same as the 401(k) account. But the main difference is 401(k) is created for private-sector employees and the 403(b) account is dedicated to the public-sector employees.
C - IRA or Individual Retirement Account:
Apart from 401(k) or 403(b); you have another retirement savings plan available in the financial market. It is an IRA or Individual Retirement Account.
The IRA invests in different financial sectors like mutual funds, bonds, and stock markets.
There are self-directed IRAs available in the market as well who give the investors enough freedom so that they can choose to invest on their own as well as they can invest in more broad sectors like REITs.
In this self-isolated period, when you are completely confined in your home, utilize this time to think about your future financial management. Read various articles written on these topics and search the official website well to gain profound knowledge in these subjects.
So, when this quarantined period will be over, you can go straight and meet the respective officials. Open a savings account or accounts of your choice (401(k)/403(b) and IRA account) and save a hefty amount of money every month there.
3 Think in this leisure-time how you can pay back your unsecured debt
Are you drowning in a huge amount of debt? You can think about debt consolidation to pay off the unsecured debt.
What benefit will I get if I opt for debt consolidation?
There are 3 ways of debt consolidation to repay your unsecured debt.
- Debt consolidation program
- Debt consolidation loan
- Balance transfer method
Debt consolidation program:
If you have more than one debt you can opt for the debt consolidation program. The benefit of opting for the debt consolidation program is your multiple debt payments will combine into a single payment.
And your single monthly payment will be lower than before. Know More ...
Debt consolidation loan:
You can take out a debt consolidation loan to pay off your multiple debts. Search for banks that are offering a loan lower than the average interest rates of all your debts.
You can take out the loan to pay off all your debts. Then take advantage of the lower interest rate and pay off the debt consolidation loan within the stipulated time with the facility of Single Monthly Payment. Know more ...
Balance transfer method:
You can contact a credit card company and request them to give you a balance transfer card. Through such a card, you can transfer your entire outstanding balance to a new card.
Under the balance transfer method, you have the chance of paying off your debt with a 0% interest rate for a certain period. For example, you can say for a period from 6 months to 4 months.
If you pay off the debt within this period, you will get the benefit of paying back debt with 0% interest rate. Know more ...
Can I consolidate my payday loan too?
Yes. You can. The banks, credit unions, or the online lenders will offer you the personal loan for payday debt consolidation.
Debt consolidation is a good option if you think about settlement of 400% APR of the payday loan.
As you have got enough time in your hand now, research about various aspects of debt consolidation and think about the most suitable option for you to pay off the debt.
4 You have the option to think about investment aspects as well in this spare time
Though the stock market is down currently in the US what can you do about it? The world economy is currently in a bizarre state.
So, rather than thinking too much, you must analyze the investment options you have and what will suit you much better than the other available options.
A. Analyze deeply if investing in the stock market can be profitable for you:
Have you ever thought about investing in the stock market? If you have still now kept yourself aloof from the stock market it may be the right time to think about stock market investment.
The general rule says you have to think with a long-time frame in the stock market. Because a person in the stock market only becomes successful if he/she has the patience to make long term planning.
So, be visionary and invest in the stock market with long term goals.
B. Take your time and start thinking about mutual fund investments as well:
It is not at all a bad idea if you are considering investing in the mutual fund. The core and basic rules of mutual fund investment are somehow similar to the share market investment.
Like the stock market, in mutual funds too, you have to hold your patience. Mutual funds take time to grow; so, you have to adopt a long-time goal in the case of mutual funds too.
C. Why only the traditional stock market and mutual funds, start your research about REITs too:
The REIT rule clearly states that 90% of the total profit must be handed over to REITs stock owners as a dividend. Not only that but it is also compulsory for the REIT to hand over the profit quarterly to the stock owners. So, investing in REIT is another option; you can read about it in your self-isolation time..
In a conversation with CNBC, JPMorgan Chase chief Mr. Jamie Damon has clearly stated that the US is currently in the same stage as it was in 2008. It means we are again heading towards the era of recession and financial stress. So, you must utilize this social isolation time to start exploring various avenues of personal finance that can give you financial advantages in this upcoming time of financial hardship.
These are the main features of a personal financial statement