As a freelance writer, my job is always a little unpredictable, but with the coronavirus it was downright tumultuous: corporate clients were dropping quickly, while new clients in sectors like news and healthcare were popping up. Week to week, I had no idea what to expect, other than knowing my income was definitely lower than typical.
I wanted to keep control of my finances despite the uncertainty in income, so I started to minimize expenses. I was already saving money on gas, dining out, and entertainment, but I needed to cut more.
About half of my student loans are federal, so they were already paused through the fall . With student loans reduced, my two biggest expenses each month are my car payments ($360 for my car and $225 for my husband's) and mortgage payments ($1,095 for our rental property and $1,460 for our primary residence).
I decided to look into reducing those payments. I had no idea what the coming weeks were going to hold for my family, but I did know I would likely be making significantly less money than normal. Since I'm the breadwinner of our family, reducing expenses felt like a necessary precaution.
Putting my car payments on hold
I started looking into pausing my car payment in early April. I called the credit union that holds my car loan and was pleasantly surprised to get a real person on the phone immediately. I uttered that key phrase "my income has been impacted by COVID-19," and she sympathized.
She explained that I should be able to skip two months of payment and have them added to the end of my loan. Interest would still accrue during those months, but there would be no fees, penalties, or balloon payments.
The interest on my loan is under 5%, so I wasn't concerned about two additional months of interest. I would have much more peace of mind knowing I had $720 extra to put toward essential expenses like groceries over the next eight weeks. I filled out a one-page form asking for the pause on payments and got a call the next day that it was approved.
Putting a hold on my husband's car payments was slightly more complicated. Because his payments are on autopay, we had to call both his lender and our bank in order to pause the payment for two months. Still, the extra $450 in discretionary spending for eight weeks was well worth the hour spent on the phone.
A mortgage pause would have resulted in a balloon payment
Next, I looked into putting a hold on our mortgage payments. I already knew that my income had been impacted by the coronavirus. Our renters hadn't reached out with concerns about paying their rent, but I wanted to see if we had the option of putting the mortgage payment on hold and passing that along to them during these tough times.
My mortgages are with two separate lenders, but both had the same message: They were offering forbearance, but any skipped payments would be due in full when the forbearance period was over. So, if we paused payments for April and May, we would owe those two months plus the normal payment in June.
To me, this seemed like a recipe for disaster. I have no idea what the next few months will be like for my business, but I know that right now I can continue to prioritize mortgage payments. Having a balloon payment for the skipped months hanging over my head would have been a constant, nagging stress for me. So, I decided to continue to pay my mortgages as scheduled.
Making peace with uncertainty
There's still a lot of uncertainty about how the pandemic will affect my family's finances. Even as the country begins reopening the economy, the financial effects of the virus are likely to linger.
I can't control the economy or whether my clients decide to put projects on hold. However, I can carefully monitor my finances to reduce my risks. For now, that includes pausing our car payments to have a little more wiggle room financially.
