During these uncertain times, should you continue paying off your debt, or should you save your money and build up an emergency fund? You want to keep gazelle intense with paying off your debt, but you also know there might be tough times ahead. You maybe wondering what to do.
There are estimates that 20-30% of people will lose their jobs because of this virus. Some people have already been laid off because of industries like airlines, cruises, and hotels not having customers. Restaurants and bars and anything associated with tourism and entertainment are being affected since people are supposed to stay home. If this continues for very long, many others will lose their jobs because of the hit to the economy.
If you think you have a good chance of being furloughed or let go, then pause your baby steps and pile up money. It comes down to how stable you think your job is.
If you are on baby step 2 and think you won’t have your job in 6 months, pause your debt snowball. Keep making the minimum payments on all your debts but save as much money as you can until the storm is over. Once this is over and you are back at work, take all but $1,000 and apply it to your debts.
If your job is not at risk, don’t pile up money because of worry. Making decisions based on emotions is not how you build wealth.
Rethink Your Budget
If you think your job is at risk, now is the time to rethink your budget. Don’t keep living above your means with that car payment or that outrageous cable bill. Get rid of them. Even if you can go get takeout, that doesn’t mean you should. This is a great time to reevaluate what is important to you.
Go through each item in your budget and ask yourself if this is something that you really need if you lost your job. Start planning right now and get rid of everything in your budget that you do not need.
If your job is not at risk, it’s still a good time to review your budget. Always make sure you are on track to reach your goals.
The uncertainty in the US economy or in your job are not reasons to panic. Continue to pay off debt if your job is stable or save money if it’s at risk. Once this passes and the dust settles, continue your plan for building wealth.