Note: This content is not provided by American Express. Any opinions, analyses, reviews, or recommendations expressed in this article are those of the author alone and have not been reviewed, approved, or otherwise endorsed by American Express. Terms apply to American Express benefits and offers. Visit americanexpress.com to learn more.
Caroline regrets her New Year's Day 2020 Facebook post. Naively, she wrote, "Bring it On, 2020! Let's do this!"
It has since been deleted.
Caroline (who asked us not to use her last name) agrees with 99.99% of the world who feels like 2020 was a complete dumpster fire. Within the span of nine months, her husband lost his job and they depleted most of their personal savings account, even tapping into the kids' savings.
"I have spent the last nine months feeling like I am going to throw up," Caroline said. "We were really fortunate to have had an American Express® High Yield Savings Account (member FDIC) that didn’t require a minimum balance and wouldn’t charge us fees. Most of us plan for a rainy day, but the pandemic was turning into a rainy six months. Unemployment [benefits] was great until it wasn't. We ran through our savings before Christmas and I was literally walking through the house looking at what I could wrap up and regift to get through the holidays."
Her story is hardly unique. Caroline and her husband are one of the 25.7 million American workers who have been hurt by the pandemic and economic shutdown.
Thankfully, her husband has recently returned to work. In the meantime, Caroline has gotten creative to find ways to stretch their budget and start to rebuild their savings. In talking to her financial planner, she put a blueprint in place to weather the storm.
Here's what she did and how you can put her practices in place in your own life:
You may have heard of Dave Ramsey's popular envelope system. Caroline realized that using only cash would be a lot tougher in a pandemic, where she was trying to have as little contact as possible. Instead, she put both herself and her husband on a strict weekly budget. $250 for her and $100 for him to cover all their groceries, gas, subscriptions, everything other than their utilities and mortgage (which were already being auto-debited).
She set up her online banking system to automatically move the money into their individual debit accounts on Sunday night and that's all they were allowed to spend for the week. The result? They had to take a hard look at what they were spending, slashing non-essentials and finding replacements for pricier necessities. It also allowed her to set aside $25 each week to put back into their emergency fund.
Caroline joined every local Buy/Sell/Trade group on Facebook and started selling off things they weren't using anymore. All those baby clothes sitting in storage? Gone. The bike she never rode anymore? See ya. While she didn't get anywhere near retail, she was able to post across multiple message boards to quickly sell her items. Buyers paid via Venmo and she left the items on her porch for pick up.
Tip: Caroline says to catalog everything upfront and create a spreadsheet of what you have. Include what you paid, when you list it, what you're asking, and what you eventually sell it for. Do some research as to fair market resale prices for comparable items and list them accordingly. Don't get greedy if you want your items to sell quickly. Caroline said within the span of two months, she was able to replenish her savings account with $300.
Pre-pandemic, Caroline was a stay-at-home mom with two elementary school-aged kids. When the kids’ school shut down, Caroline decided to homeschool the kids and found some great home school curriculum online to guide her. Word around the neighborhood got out about her plans, and two other families asked if they could join. Caroline decided to charge $150/week per child and used the money for her bills and to put another $50/month back into savings. While being a pod-school teacher may not be an option for you, there are plenty of Covid-friendly side-hustles to check out.
Thankfully, these strategies were enough to help Caroline rebuild her savings, but her financial advisor also recommended taking a look at pausing her husband's 401k contribution and their 529 contributions for the kids' college funds as a next step. If you're having trouble paying your mortgage, the US Department of Housing and Urban Development has a list of HUD-approved homeownership counseling agencies that may be able to help.
Caroline is starting to breathe a little easier going into 2021, but she definitely learned her lesson this year not to tempt fate.
"This year, I posted nothing on my Facebook timeline about 2021 being my year."