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3/22/2020

7 MoneySmartLife Tasks to do during the COVID-19 Social Distancing

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 The coronavirus mitigation protocols have forced many people to stay indoors. Here are some tasks you can do to improve your financial situation during this time. These tasks are not for the financially desperate or food insecure. Instead, it is for those that have a level of sustainability at the beginning of the COVID-19 protocols. (Checkout 10 MoneySmartLife Coronavirus Strategies in a previous post on this site.) Here are the 7:

1. Work on that business plan. No longer will you have to serve your greedy corporate overlords. There will be opportunities after the coronavirus economic carnage is over for new businesses. Do the work on your plan now that you claimed you never had the time to do. Get serious about your dreams. Put them on paper.

2. Increase your cash on hand and limit your trips to ATMs. Money is always good to have available, especially during times of economic dislocation.
  • Make a point to wear gloves when using keypads at checkout, ATMs, and gas stations.
  • Disinfect your credit and debit cards after any external use.

3. Move money to more secure liquid accounts. From certificates of deposit to a savings account or from a brokerage money market fund to an FDIC insured one. Interest rates are low across the board right now. So safety may be a more critical consideration than an incremental higher interest rate at this time.

4. Take your insurance game to the next level. 
  • Shop all your insurances, car, homeowners or renters, life, and disability. Here’s one of those things you claim you never have the time to do. You should it do now. It may take a while to do them all, but insurance comparison shopping is almost always worth the effort for reducing premiums or improving coverage.
  • Do a video inventory of your stuff for property insurance claims. It is worth the effort. And you have the time now.
  • Understand your medical coverages, deductibles, and copays, if any. What impact will the coronavirus have on your Health Savings Account (HSA) or Flexible Spending Account (FSA) contributions or withdrawals? Can you use your HSA or FSA for COVID-19 prevention expenditures?

5. Organize your financial records. 
  • Go digital with appliance, gadget, gear, and device manuals, warranties, and receipts. Search for the manual on Google then add to it your online storage for easy access. Scan receipts and warranties for upload also.
  • Have a shred-fest. Get a shredder and destroy all those piles of documents and envelopes you have accumulated. Go through each one you have. When you have one in your hand, make a decision. Either digitize it or destroy it. Reduce your financial clutter. You’ll feel better, and your money will be easier to manage.

​6. Spend time daily, increasing your financial intelligence. Make a concerted effort to learn more about your money and the best ways to handle it.
  • A deep dive into MoneySmartLife.org website might be an excellent place to start. May I self-servingly suggest that you also like and subscribe to our YouTube and Facebook platforms. We provide consistent value-added content across our network designed to empower sustainable financial well-being for working-class families.
  • You also should spend some time on the cable business channels, Bloomberg, CNBC, FoxBusiness, or PBS. Listen and become more familiar with financial terminology. Watching can also increase your capacity to understand the economic fundamentals that impact your money. It can help you make better-informed decisions.
  • Add some business programing to your viewing rotation. You don’t have to binge-watch them. To some, it may have to be an acquired taste. But acquire it, and you will be glad you did.

7. Relax, don’t panic. There is no need to hoard items or cash out your 401(k). Things will be rough for a while, no doubt. But it will settle down. When it does, many opportunities will abound for those prepared to seize them.

​Make the best of this stay-in period for yourself, your family, and money by implementing the above ideas. You might not be able to do them all, but you can do some.

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3/16/2020

10 MoneySmartLife Coronavirus Strategies

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10 MoneySmartLife Coronavirus Strategies
The coronavirus will impact your money and your life. Here are some smart things you can do now. These strategies will be useful for both the well and ill-prepared. The economic disruption caused by the response to the coronavirus pandemic will pass. Here are the MoneySmartLife things you can do now.
  1. Hoard cash. Aggressively save money now. Cash is King during a recession. This is not the time to be making extra payments. You can do that when the economy recovers. Your spending is probably already reduced because of social distancing. Bank the money.
  2. Prioritize bill payments. Know which bills get paid first if money runs short. 
  3. Ask creditors about payment relief programs now. Don’t wait until your in trouble to find out your options. Look to protect your credit score when entering these programs. Make sure you understand what information will be sent to the credit bureau while you are on the program. Negotiate for “paid as agreed.” 
  4. Draw on your emergency fund, especially food. This is the time to use your emergency fund. Its cash can subsidize your income for a while. The food in your emergency fund is as crucial as cash during this time. It will help your cash flow by reducing food expenditures and improve your social distancing by reducing shopping trips.
  5.  Don’t panic and cash out your 401(k). The best thing to do is to keep in mind your time horizon. If you were appropriately invested based on your time horizon and risk tolerance, relax. If you are considering a loan from your 401(K), don’t. Such loans usually are not good ideas because of their long term negative opportunity costs. A loan taken during a depressed market magnifies these negative impacts.
  6. Seize the opportunities made possible by the downturn. Build your emergency fund, if possible. This prepares you to withstand “stuff happens” and seize the opportunities a recession always provides. The stock market crashed. The Fed pumped liquidity into the markets, and interest rates are low. Good credit can be prudently leverage into opportunities for growth.
  7. Support local small businesses. Our fellow citizens need us to act responsibly toward each other. Social distancing, hand washing are positive actions we should take.  It also means making sure we prioritize our spending to the small local companies that are the bedrock of our community during this disruption. Prioritize your spending in such a way that such businesses get a generous portion of your disbursements.
  8. Be mindful of online spending. Technology will help us cope with social distancing. Online shopping and home delivery are effective strategies to limit contact. But what can be a boon can also be a bane. Don’t get induced to spend more by the multitude of online retail tricks and traps. Set a spending hard limit for each online trip. 
  9. Manage your cashflow. It’s not just how much money comes in and how much money goes out. It’s also when does it come in, and when does it have to go out? That’s called cash flow. If you manage your cash flow properly, you can reduce your stress and survive short term minor financial shocks.
  10. Maximize rewards and benefits from increased online spending. Increase your generosity and give to others. You can have meals or food delivered to the elderly and other vulnerable individuals. Many of our older family members are not digitally literate enough to shop confidently online. They can, however, open a box. Get a list from them or send their favorites. It will help their social distancing and reduce their risks.
The coronavirus pandemic economic disruption will pass. When it does aggressively rebuild your emergency fund’s cash and food. There will be another need for them. Be even better prepared the next time.

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3/3/2020

Pay As You Stay Property Tax Program

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HPTAP Guidelines Detroit
​Low-income Detroit homeowners may get some relief from their ongoing tax injustice with the new Pay As You Stay (PAYS) program. Gov Whitmer signed the bill at the end of February that provided relief for qualifying taxpayers. The law starts now and sunsets in 2023.
Participants in "Pay as You Stay" will get their interest and fees eliminated. And the remainder of their debt would be capped at 10% of their home's taxable value under the new law. You must be eligible for the Homeowners Property Tax Assistance Program to get PAYS.
The application process can be found at the City of Detroit Pay-As-You-Stay webpage. Hopefully, the people that need to know about this program will find out about it in time. The city has a less than honorable history in property taxation.
This new program doesn't address over-assessments past or present that criminally confiscated hundreds of family homes and blighted neighborhoods through tax foreclosures.

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2/9/2020

Manage existing debts and Has access to potential resources | Financially Healthy Behavior

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man holding savings bank
Your behavior is one crucial factor that determines your financial well-being. It is not just what you know to do, but what you actually do that counts. Knowing you must save for retirement is different than saving for retirement. Knowledge should inform behavior not to be a substitute for it.
The next behavior in our look at six financially healthy behaviors is managing existing debt and has access to potential resources. This is your skills and ability to control your debt. And your capacity to generate outside resources in times of need. Let’s take a look at each.
Manages Existing Debts
  • “A manageable debt load is one in which the individual is able to keep up with associated debt obligations without experiencing significant stress.” This includes formal debts like credit cards, student loans, car loans, etc. It also includes informal debts to family, friends, and others in your social network.
  • Your debt load is different than your living expenses. Yes, they are all “bills that gotta be paid. True dat!” But living expenses are results of your living and consuming. In contrast, debt is a “voluntary” surrender of future time and earnings. Both are cost obligations, but here we are only talking about your debts.
  • The characteristics of a well-managed debt load are:
    • you are paying your bills on time, every time.
    • you have discretionary income left after debt service payments. Paying your “bills” shouldn’t take all your money.
    • your overall debt load is consistently being reduced.
  • Managing debt effectively in our consumer-based “buy now-pay later” advertising saturated ecosystem requires you to develop a visceral aversion to debt. Change your default programming to be against adding liabilities to your balance sheet. Refuse to encumber another minute of your future by promising payments. The best-managed debt is no debt at all.
  • How you pay your debts now impacts your future ability to borrow money from both formal and informal sources. A weak or erratic payment history limits your ability to borrow from those same sources again. While a good payment history will often be rewarded with an increased credit line and expedited access to resources.
Has Access To Potential Resources
  • In times of need, a person should be able to gather potential additional resources by calling on external formal and informal sources. Those sources determine your financial and social lines of credit, i.e., how much you can borrow. Potential social and economic resources should be cultivated before needing them.
  • People often depend on their social networks to help weather a shock even if when they have access to formal financial products. Social capital that can be converted into resources when needed is especially crucial for those with credit score challenges or less responsive financial institutions.
  • Your social network requires vetting. Who do you believe is part of your safety net? Who will you depend on and come through for you during tough times? Do they agree? Since reciprocity is often implied in these relationships, who regards you as part of their safety net. Do you agree?
Managing debt and cultivating credit lines are MoneySmartLife behaviors and skills necessary to acquire on your journey toward financial well-being.
​

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1/19/2020

How to keep your money longer when paying your bills

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There is a way to keep your money longer by using credit cards and autopay. I have been using this strategy successfully for several years. It has evened out my cash flow and put cash and rewards in my pocket. This strategy is only valid if you pay your credit card statement balance in full every month. Here how it works.
DATES are important. 
You need credit cards with different closing dates throughout the month. Credit card transactions are billed at set times called billing cycles. The last day of the billing cycle is the account statement closing date. The due date is the date by which you must pay your credit card statement balance. There is a grace period between the statement closing date and the payment due date. By law, the credit card company is required to offer a grace period of at least 21 days. This is the time from your statement closing date you get to make a payment before interest is charged on new purchases. That is 21 more days to keep your money.

The credit cards I use:
  1. Discover closing date 26th due date 21st of the following month
  2. MasterCard closing date 17th due date 14th of the next month
  3. Visa 6th due date 3rd of the next month
  4. I also use my wife’s cards if the closing date is more advantageous.
  5. Closing dates can vary by a few days based on the credit card billing cycles. For example, the 23-day billing cycle may have different closing dates after February, July, August. So don’t cut this too close. The credit card due date will always be the same.
You can often change your current due date if you contact your credit card issuer. Most will let you switch your due date. So if you already have multiple cards, you can spread the due dates and get started. Changing your due date will change your closing date by a corresponding number of days also.
All transactions since the last closing date will be included in your credit card statement. Credit card transactions are billed at set times called billing cycles. The last day of the billing cycle is the account statement closing date. You have a grace period between the statement closing date and the payment due date that’s roughly between 21 and 25 days, depending on the card you have. Your card has a grace period, The credit card company is legally required to offer a grace period of at least 21 days. This the time from when you get your statement to make a payment before interest is charged on new purchases.
  • DTE autopay on the 27th of the month. Statement closing date the 17th of the next month. The credit card due date is the 14th of the following month. 
  • Autopay DTE March 27. I get a credit card statement on April 17. Pay credit card in full on May 14. That is 47 days, I get to earn interest on my utility payment.
Resist temptation. You can’t spend the money on anything else. You must pay the credit card bill when its due.
I use this strategy with reward credit cards for cash back or travel rewards to help maximize the benefits. I love accumulating miles from paying for utilities. I use the same strategy for cell phones, cable/internet, streaming subscriptions, and natural gas.
If you actually deposit the deferred payments into an interest-bearing account, you may even see a modest gain over a year.
Other considerations 
Monitor your credit card statements carefully. Auto-pay amounts may change. I do not auto-pay my credit cards. This forces me to interact with the website to pay the bill. Therefore I get to monitor my statement before I make my payments.
Using this strategy will allow you to pay your bills on time and keep your money longer while doing it. 


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    Mansa Musa is a homeownership counselor and homebuyer educator. He is currently the Principal at MoneySmartLife.org. He blogs and speaks on subjects of financial well-being and financial capability. Helping working class families live a sustainable MoneySmartLife through pragmatic solutions and behavior changes.

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  • MoneySmartLife.org and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. 
  • The views, thoughts, and opinions expressed belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual; either in the past or future. 
  • This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.” MoneySmartLife.org states that they’re using this material as part of their “efforts to advance understanding of issues of “financial well-being” and that they believe that this constitutes a “fair use” of the material in accordance with title 17 U.S.C. Section 107. ​
  • Home
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  • Other Blogs and Voices
    • How Much Does It Cost You To Work
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