Money problems can cause a lot of stress and worry, and nobody knows for sure what's next in 2020.
"Right now, what I'm advising people to do is just take a collective deep breath,” Chris Hogan said.“Let's make sure we're trying to control the things we can control.”
Hogan is one of the nation’s leading experts on personal finance and a bestselling author. He shares his money saving and investing message at live events nationwide, and on his call-in show.Hogan has this advice for people worried about their finances during the pandemic.
"I've been telling people, go into conserve mode. It means you want to be very intentional with any money coming in, but also money going out," Hogan said.
For those who have lost a job, or had hours or pay cut, Hogan recommends concentrating on the four walls: your home, utilities, food and transportation.
"These are the things you need to make sure you're taking care of each and every month, everything else has to come after that," said Hogan.
If you can't pay creditors, Hogan recommends staying in contact with them and take notes about your conversation and write down any agreed upon plan of action. He also stresses don't promise to pay if you can't.
"If you don't have the money, let them know that and let's figure out a way that they're working with people,” Hogan said. “You're not the only one going through this situation, so the companies are working with people, it's your job to find out how.”
As part of the Dave Ramsey team, Hogan advises people to have a $1,000 emergency fund. He said under most circumstances, you should pause on investments in order to attack debt. Hogan recommends making minimum payments on bills and throw any extra money at the smallest debt first, to pay it off. You then move to the next smallest debt.
"But here's the deal. If you've had a job loss or an income cutback, you're not going to be able to attack debt right now. What you're going to do is go into conserve mode and save up as much as you can," said Hogan. "If your hours are stable and your income is stable, I want you to continue the process of attacking the debt, then building a fully funded emergency fund, then investing for your future."
Any money saved during "conserve-mode" can later be thrown at debt once things are more stable.
As Craig Day paraphrased it, "take that money and punch that debt right in the teeth."
“Absolutely Craig, listen we've got to get that debt out of our lives because it's a thief buddy, it steals from us now, and a lot of people are feeling that crunch right now, they realize this debt is not my friend,” Hogan said. “All it's doing is taking my peace of mind and taking my money. I want you to eject it and get it out of your life."
Peace of mind is something we all want in 2020, and 2020's been such a tough year, it's hard to find peace of mind.
When asked what lessons we should all learn from handling finances through the pandemic, Hogan left us with this.
"Well I think this pandemic, from a personal finance perspective, has taught us the value of an emergency fund, and that is getting out of debt. Then I want you to build up a fully funded emergency fund. Three to six months of expenses have that money sitting there in a money market account ready to help you, so I think that's happened,” Hogan said. “Another thing is for us to understand hey, we ultimately need to be responsible for ourselves financially. We can't wait on the government to come and save the day, to try to send a stimulus to do it, we need to be prepared ourselves."