Finance

According to a recent Bankrate survey, 19 percent of Americans have used their emergency fund during the coronavirus outbreak. Does this mean you should tap your savings, too?

While the full economic fallout of the lockdown remains to be seen, millions of people lost their jobs. Even if you haven’t been laid off, there’s a likely chance you lost some wages due to the pandemic.

During all this financial uncertainty, you may not know if it’s the right time to tap into your emergency fund.

When Should You Use an Emergency Fund?

An emergency fund is a short-term savings account that acts as a safety net when things go sideways. It’s designed specifically to help you tackle unexpected expenses, like an unusually high bill, essential repair, or medical prescription.

It’s also there for rainy days when everything seems to go wrong. A robust fund can keep you afloat when you lose out on pay, lose your job, or suffer from an illness.

Anything that interferes with how much money you bring in could be a reason to dip into your emergency fund. These savings may cover living expenses until you’re back on your feet.

But before you tap it, ask yourself these three questions:

1. Is it necessary? You don’t know how long the pandemic may last, so there’s no point in wasting your savings on fun splurges. Stick to the essential things you need to survive.
2. Is it urgent? If it’s something you can postpone safely or live without indefinitely, consider putting this purchase on the backburner until you’re in a better financial position.
3. It is unexpected? Predictable expenses like birthdays or property taxes are things you can see a mile away, making them easy to budget in advance. Unexpected expenses can come out of the blue, making them much harder to budget for.

What if it’s Not Enough?

Generally speaking, it’s recommended your emergency fund contains 3 to 12 months’ worth of living expenses. But what if you have less than that? What if you have nothing at all?

When your savings fall short, borrowing an installment loan may be an option.

Just be careful when you tap into installment loans online. It’s not a 1-for-1 replacement for your emergency fund, which can help you with any living expense while you’re in a tough spot.

The installment loan lenders at MoneyKey recommend applying for these products only when you need help covering a small, non-recurring emergency expense.

Under this rule, an installment may be an option if:

• You have unexpected car trouble that racks up a big bill with the mechanic.
• You fall ill out of the blue and need help covering your prescription antibiotics
• You break one of the lenses of your glasses and need to replace the pair

An installment loan is not an option if you need more money to buy groceries or cover a recurring bill.

Building an Emergency Fund from Scratch

Don’t be afraid to use your emergency fund when things get tough; it’s there for you to spend one day when you need a little extra help.

Just remember, you need to keep saving if you expect it to have your back in the next emergency. Whether you keep your hands off your fund, drain it for all its worth, or never had one to begin with, it’s always a good idea to contribute more into savings.

Most people spend time over the internet looking for accurate debt solutions and while looking for this term, there must be chances that you must have been heard about IVA (Individual Voluntary Arrangement). To be precise, IVA or Individual Voluntary Arrangement is one of the top solvency solutions in the UK (United Kingdom). 

In case, if you don’t know then more than 71,000 people started an Individual Voluntary Arrangement alone and I guess it makes sense to the people who are continuously looking for debt solutions. However, not everyone is familiar with IVA. So, we have decided to add up all the details including what is IVA? How does it work with debt solutions? and many more.

What is an Individual Voluntary Arrangement?

IVA is a legal binding agreement between the creditors and debtors to pay off their debt in extended time at affordable interest rates. This solution is approved by the court of the United Kingdom and hence, it is only available for the citizens living there.

How does it work?

If you are interested in Individual Voluntary Arrangement then your all contact records will be added into the national insolvency register (whichever is a publicly available record). The information that will be added to it is your name, address, contact number, and some prior essential information.

To be precise, anyone can search for it. Your details will get removed three months before your last IVA dates.

Time Limits?

There are no time limits for IVA. However, it typically lasts for around five to six years. This solely depends upon the debts and circumstances of the insolvency partner.

Certificate?

The completion certificate of IVA will get issued once you will pay all the debts that you are holding under this agreement. This drastically will break the bond between creditors and debtors.

Frequently asked questions

How does the Individual Voluntary Arrangement work?

It is a formal repayment plan for the debtors residing in England, wales, and northern Ireland. To be precise, it is a complete debt solution for the people who are not able to pay their full debt but able to pay some money towards the debts they are holding.

It agrees with the creditor and debtor to make an agreement. It would be easier for the debtor to pay off his debts in monthly repayment options at affordable interest rates.

What does it mean?

To be precise, having an Individual Voluntary Arrangement can help you to manage your debts by making them easier for you to consoling them into monthly repayment options.

How badly does it affect your credit score?

What will be the impact of IVA in your credit score? Interesting. There will be a huge impact on your credit score and it would be difficult to take any short term credit during the practice of five to six years.

If you do want to seek some credit while you are in the bond with IVA? You may have to need permission from the insolvency register officer regarding the same.

COVID-19 has brought financial stress to many. With the threat of job loss or pay cuts looming over our heads, you need to know how to manage your personal finances during this time. Without that, you may find yourself in financial trouble, adding to the mental stress that the pandemic brought.

Let’s look at 6 tips that will help you manage personal finances during the COVID-19 pandemic. 

1. Re-evaluate Your Budget

Take a look at all your current expenses and eliminate unnecessary ones. Anything that screams luxury or frivolous can be ditched. For example, you do not need new expensive clothes and beauty products. The essentials for which you need to budget for include food, groceries, medicine, and bills.

Save as much as possible and put that in your emergency fund. You need to be prepared for a situation where your income gets affected either by pay cut or a job loss. Apply for a personal credit line if you need cash urgently.

2. Keep Your Lender in the Loop

If you are concerned about not being able to pay your bills on time, get in touch with your creditors and bank before things get out of hand.

Yes, it could be nerve-wracking to have that conversation with your creditors, but do take that step. Considering the current situation, the pandemic has put the world in; many lenders are working to support their borrowers. They can offer solutions like extending the bill payment date or something else that can work for you.

3. Apply for a Personal Line of Credit for Emergencies

You never know when an emergency may strike, but you need to be financially prepared for it. One way to do that is by keeping a personal line of credit ready for emergencies. This financial tool allows you to withdraw money from the credit line whenever you want, and you need to pay interest only on the amount that is withdrawn.

Look for lenders who offer lines of credit at nominal interest rates. This could really help you if you find yourself in a financial fix.

4. Buy Household Items for a Month

This is the time to reduce human contact as much as possible. Go out once a month and buy non-perishable items for the entire month. These include groceries, prescribed medicine, diapers, baby food, pet food, detergent, soaps, etc.

Look for sales or discounts that you can get on large purchases. Moreover, you will save money on fuel when you just make one trip.

5. Beware of Scams

While the world is reeling under the coronavirus pandemic, scammers are taking advantage of the situation. It isn’t uncommon for people to feel anxious about their finances during these uncertain times. So, if you come across a deal that looks too good to be true, stay away from it.

If you get emails or SMS asking for sensitive information like bank details or asking you to click a link, it is most probably a scam. If it looks like it’s coming from an authentic source, call them to confirm before you do anything.

6. Reduce Financial Obligations

If you have any outstanding debt, try to restructure it and pay it off in small EMIs for a longer period. By reducing your financial obligations, you will make your financial situation slightly manageable when everything normalizes.

Final Thoughts

If you want to be in a strong financial position without extra liabilities, you need to be smart about how you handle the finances during the pandemic. The tips mentioned above will help you weather the storm without too much damage.

When I’m in a book shop, I always find myself visiting the money and finance section to see the latest titles. Usually, the top selling investing books will be highlighted, which allows me to keep my finger on the pulse of what people are reading and what financial topics interest them. 

The top investing books can be on varied topics, such as day-trading like a pro, saving for a house, or putting your budget on a diet. 

In fact, the topics of the top investing books tend to rotate, and in a sense they remind me of the fashion world – slowly churning through ideas on 40 year cycles like a predetermined wheel. 

Of course, there are some sensible reasons for this. The economic cycle, for start, means that the population will generally have a changing mindset year-by-year. Sometimes people will be most interested in cutting back, such as during a recession. In other years, where incomes are up and confidence is booming – there will be much more interest in how to tap into a booming stock market. 

Either way, the top investing books will be consumed largely in the same volume each and every year, regardless of their content. 

The question posed in this article is: do they actually work?

Answering this question depends largely on the type of investing book you’re imagining, and what the investing book is actually trying to achieve. 

Do investing books actually work? 

Investing books do generally achieve their objectives. The better question is – is that objective actually aligned with your best interests?

Therefore to really get to the bottom of whether the top investing books actually work – you need to interrogate the title in question and understand what the motivation of the author really is. 

I’ll simplify the matter by giving 3 examples of prime motivation for investing book authors:

1. PR & Brand Recognition
2. Benevolent education of the masses
3. Book sale volumes
4. Legacy

Let’s quickly take a stab at each of these motivations in turn. 

PR & Brand recognition may be applicable to a self-employed individual who is using a book launch as a platform to promote themselves as a product in the future. For example, the book may shine a positive light on their own investment performance, in a way that will encourage more investors to give their money to the author to manage. 

Educational authors are usually quite academic or grounded in the day-to-day concerns of the general public. Their interest (much like my own), is in increasing the general knowledge of the public about investing. In the UK, we are not as prone to investing as our counterparts in the US, and much of that is cultural. We are not encouraged to invest because it is seen as risky (it is!) and that we should be careful with our money. In the US, as a contrast, entrepreneurship is heavily pushed by many in society, and investing in the stock market is closely connected to this.

Authors chasing high book sales could be aligned with your interest. After all, nobody will buy a book if critics and the publisher didn’t think that it would be a helpful read for anyone. That being said, a serial author will tend to write on specific matters rather than giving an all encompassing guide. Doing so would limit their ability to write future titles!

Legacy authors are those looking to write a memoir of sorts on their times as an investment professional. I find that these can be really interesting because their gestation period has been long, and their thoughts very well formed. After all, a memoir is not typically something which is rushed. 

I find that the top investment books written by authors with a legacy or educational mindset are the most effective and work the best, because the heart of the author is more closely aligned with that of their reader. This means they have the best incentive to provide advice which is both truthful and avoids the sensational tendencies of authors chasing best seller lists.