Suppose you are having trouble finding work during the COVID era. In that case, you’re not alone. Tens of millions of Americans filed for unemployment last year as the coronavirus took a bite out of the economy. If you were one of them, you probably want to focus some energy on cutting costs, at least until you have a full-time job again.
Try some of the proven cost-cutting techniques below to save money when times are tight. While some of these tips might seem like chump change, together, they add up to significant savings!
Ask For Deferments
Communication’s the name of the game when you are low on funds. Talk to everyone to whom you owe money when you are out of a job. Every interaction with a creditor is a chance to ask for temporary relief from payments, so your limited resources go further.
It is possible to defer payments for your mortgage, car payments, utilities, and more. Not every creditor will agree, but some will, and you can save big on monthly payments until you are working again.
Ask For Lower Interest Rates
Millions of people are out of work, so creditors are often willing to temporarily lower interest payments so they aren’t flooded with loan defaults. Call each creditor and ask about lower rates and fees while you are out of work.
Cut Your Energy Costs
You might reduce your energy costs by looking for lower rates online for utilities if your city is deregulated. Find out if your electricity company offers incentives for when you use power during off-peak periods.
Use websites such as Gas Buddy to find the least expensive gas in your community to save while you are job hunting.
Borrow From Retirement Accounts
If you are unemployed for months, you may consider borrowing from your 401k or IRA. Rates for a 401k loan are low. However, note that you may need to repay the loan within two months if you lose or leave your job.
Also, note that if you don’t pay the loan back, the IRS treats it as a distribution, and you’ll be subject to state and federal income tax on the funds borrowed.
Another related option is to take out a margin loan secured by the stocks in your retirement account. If you think the stock market is rising, this is a better option than selling.
Give Gifts of Service
When money is tight, regular gift-giving should go out the window. Consider giving gifts of service to friends and loved ones. Whether it’s babysitting, dog sitting, or car washes, service gifts are often more appreciated than standard gifts. Gifts of service show you care even when you can’t afford to buy presents.
Use Credit Card Rewards
If you have credit cards, you can take advantage of credit card rewards you stockpiled over the months. Getting cashback from credit cards can be valuable when you are job hunting.
Make sure you use the right cards for purchases such as food – American Express offers 6% cashback at US-based grocery stores. Also, Chase Freedom gives 5% cashback on groceries in the US.
Make Shopping Lists
Before you drive to the store, make a shopping list. People who list what they are going to buy spend less than people who don’t. There’s something about seeing a list of items that makes you less likely to spend on extras.
Now you know how to pinch pennies when you are unemployed. As you are trying out some of these cost-cutting tips, use a financial app such as Cleo to help you keep track of everything you spend.