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How to salvage your finances during economic uncertainty

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Restoring Financial Security

The COVID-19 pandemic has dramatically altered Americans' daily lives, and it also triggered historic levels of unemployment and a long list of bankruptcies among businesses small and large. If the pandemic has undermined your financial security, leaving you picking up the pieces and wondering how to get back on solid ground, all is not lost. We asked financial experts, business owners and other thought leaders for tips on rebuilding (or maintaining) financial security amid the pandemic. Here's what they had to say.

Related: 19 Smart Ways to Get Through a Recession

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Talk to Financial Experts

Perhaps one of the first steps to consider if your finances have been dealt a severe blow by the pandemic and resulting events is to speak with a financial professional, says Willie Greer, founder of The Product Analyst. As someone whose own business and personal finances were impacted by the coronavirus outbreak, Greer says you don't have to go it alone. "If you have retirement accounts or investments, and are scared of how the fluctuations in the market can affect you, expert help is available," he says. "Most decisions regarding money can seem risky at this time, and you can benefit from a second or even a third informed opinion."

Related: 21 Financial Lifelines to Help Small Businesses Stay Afloat

Pay Credit Card Bills in Full
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Keep up With Bill Payments, If Your Situation Allows It

While money may be tight right now, one way to improve or simply maintain a healthy financial profile is to be mindful of your credit score. "The changes that can occur at this time will definitely affect your finances, but your credit score can be one less thing to worry about if you can make your payments on time," says Greer. "Even giving your creditor the minimum amount by the due date can make your financial situation less devastating. You don't have to let your debt pile up and your score be pulled down."

Related: 16 Biggest Credit Score Mistakes to Avoid

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Revisit (or Create) a Spending Plan

Do a deep dive into how much you spend each week, month, and year, says Julie Quick, a certified financial planner and owner of  Cultivate Financial Wellness. "I like using sites like Mint.com to capture transactions as this really holds you accountable. But starting a new Mint account will only pull 90 days of transactions. So, put together an annual budget including expenses that you may not necessarily pay on a regular basis, such as auto insurance. Then prioritize spending and cut back on unnecessary expenses."

Related: 7 Steps to Creating a Monthly Budget

Know How to Handle Credit Card Debt
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Carefully Evaluate Debt

Call up your credit card companies and ask them to lower your interest rates, says Quick of Cultivate Financial Wellness. "This will allow your payments to make a bigger dent in what you owe," she explains. In addition, she points out, federal student loan payments and interest are suspended through Sept. 30, so any money you do pay on such debts will go directly toward principal, which can make a difference. You might also look into zero-percent interest credit card transfers but keep in mind that you typically have to pay off the full balance on such credit cards within a specified amount of time in order to truly benefit from the zero-percent offer.

Related: 26 Tactics for Getting Out of Debt

Create An Emergency Fund
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Replenish Emergency Savings

If you had to tap into emergency savings amid the pandemic, focus on rebuilding that cushion if you're in a position to do so, says Quick. This will help put you back on the path toward financial security. "Or, if you were lucky enough to continue bringing in a paycheck over the last few months, perhaps these unprecedented times made you realize you could stand to build a bigger emergency fund," Quick continues. "These funds should be in a high-yield money market account earning a competitive yield."

Related: 12 Tips for Building an Emergency Fund

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Move or Refinance Your Mortgage

We're still in a period of historically low interest rates, making it a good time to take out a mortgage or refinance, says Quick. "Maybe you realized that you could stand to downsize and reduce your mortgage payment. Or perhaps a refinance will help reduce your monthly expenses. Of course, be sure you factor in all the other expenses associated with owning a home into your spending plan."

Related: Refinancing Your Home: Should You or Shouldn't You?

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Review Insurance Coverage

There's nothing like a pandemic to make you question your insurance coverage. Do you understand your various insurance plans? Do you have life insurance and disability insurance? "If anyone depends on your income to live, you likely need life insurance to provide for them should something happen to you," says Quick. "Likewise, death isn't the only threat to your ability to provide for your family. Should you become unable to work, a disability insurance policy would help to replace a portion of your income."

Related: 12 Tips to Keep You from Buying Too Much Insurance

Tax Consultation
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Request a Tax Projection

Typically, we file taxes after a given tax year is over, when it's too late to make any withholding changes. This year, try asking your tax preparer to do a tax projection mid-year to help you determine if any changes can be made to your withholdings, says Quick. "Tax refunds from the IRS are basically the result of interest-free loans you've made to them all year long. The goal should be to get this (refund) amount as low as possible," says Quick. "If you find that you consistently receive large tax refunds, find out what you can do to reduce this and increase your take home pay now."

Related: 31 Tax Credits and Deductions That Could Save You Thousands

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Don't Aggressively Pay Down Debt or Make Large Purchases

Given all the uncertainty that's still out there, rather than aggressively paying down debt or making any significant purchases, add any extra cash you have to your emergency fund, says Quick. "You may need the money if there is another (coronavirus) surge requiring further shutdowns. Cash is king," says Quick.

Related: 15 Things You Really Don't Need to Buy During a Recession

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Make Your Investment Portfolio Recession-Proof

The stock market has been on something of a rollercoaster ride amid the COVID-19 pandemic. One way to shore up your portfolio is to aim to make it recession-proof, says Andrew Latham, managing editor of Supermoney. "Spread your investments across different asset classes, such as equities, bonds, emerging markets, real estate investment trusts, and commodities," advises Latham. He also suggests investing in index funds, which spread your money across multiple companies, reducing risk. "Index funds make it easier to achieve your target allocations and help you avoid putting all your eggs into one basket," explains Latham. "For example, for U.S. equities, you could invest across the entire Standard & Poor's 500 by buying shares of SPDR S&P 500 ETF Trust (SPY). Or, if you want to target tech stocks, you can buy Vanguard Information Technology ETF index fund."

Related: 15 Industries That Would Benefit From a Recession

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Review and Rebalance Your Portfolio Every Six Months

It's a good idea to review your portfolio and investment choices more regularly amid the current turbulent economic environment, says Latham of Supermoney. "You may not have to change anything, but it's good practice to check your portfolio is consistent with your financial goals and risk tolerance," he says.

Related: 15 Smart Investments to Make in 2020

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Boost Your Income

Whether you lost your job, experienced a reduction in hours, or you lost benefits such as your retirement match, taking on a side hustle can help you rebuild your financial security, says money-saving expert Andrea Woroch. "There are so many options for earning extra income right from home. For instance, you can become a virtual tutor through sites like Varsity Tutors or make up to $1,000 extra a month by pet sitting and dog walking through sites like Rover," says Woroch. "Other ideas include, freelancing through Flexjobs or helping people in your community with yard work or other errands through TaskRabbit. You can even make money selling your favorite recipes through CookingLight at $50 a pop."

Related: Short-Term Jobs You Can Still Get During the Coronavirus Pandemic

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Shop Savvy and Get Cash Back

If you aren't earning cash back when you go shopping for essentials, you're leaving money on the table, says Woroch. "Not only should you be checking your various credit cards to ensure you're maximizing rewards by opting into any bonus categories they might offer or special store deals, but download a cash back shopping app like Fetch Rewards," says Woroch. "The app is super easy to use. Just scan a picture of your various grocery, retailer, and restaurant receipts to start earning points, which you can later redeem toward free gift cards to popular retailers. These free gift cards can be used to offset other household essential purchases, helping you stretch your budget even further."

Related: How to Get Paid to Shop

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Adjust Your Budget Even If Your Income Is Stable

With all of the economic and employment uncertainty, now is a good time to maximize your savings and reduce extra expenses no matter what your financial situation, says Mark Falter with Mid-American Wealth Advisory Group. "While your gas, entertainment, and dining bills might already be lower right now, you can also consider other cuts such as the cable bill or subscription services," says Falter. "Even if you find that the budget cuts weren't needed, you'll thank yourself later when your savings account has grown."

Related: 31 Simple Ways to Save Money Every Day of the Month

Just Relax
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Breathe

Amid all the chaos in the world right now, one of the most important things many of us need to right now is find some calm amid the storm, so we don't make rash decisions, says Darryl Smith, a founding partner of Florida Car Accident Lawyer Team. "Our actions during this time of upheaval will determine where our fortunes go from here so make decisions from a place of reason and logic, not emotion," says Smith. "Stay calm, and use any stimulus received wisely, as now is not the time for splurge spending."

Related: 22 Ways to Show Support for Someone Who Has Lost a Job