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Find your financial footing

Unemployment, markets and worries about reopening have us reconsidering our personal spending priorities.

Pat Kastner

Unemployment has spiked, the stock market is volatile, and states are taking tentative first steps toward reopening business. Those headlines have a lot of us reconsidering our personal spending priorities. Whether this is a time for reflection or a time of critical financial decision making, Matt Sheridan, senior lecturer in finance in Fisher College of Business, has a few pointers.

Don’t call it a budget.

“The term ‘budget’ to a lot of people is a four-letter word, so to do a kind of mental trick, call it a strategic plan,” Sheridan says. “It’s what you think a good business does in a crisis. Prioritize the areas that provide you safety, shelter and food and then work down the list into more ‘wants’ and experiences with the remaining money.”

Understand the fine print.

Homeowners unable to make mortgage payments because of the pandemic might be eligible for mortgage forbearance, thanks to economic stimulus legislation. “Forbearance doesn’t mean forgiven, just delayed. Some banks are allowing people to skip the payments and put them on the back end of the mortgage,” Sheridan says. That’s an attractive option, especially since mortgage rates are likely to stay low, making refinancing worthwhile. But some banks structure forbearance with a balloon payment — a large payment due at the end of a period of forbearance. “That’s just not feasible for a lot of borrowers,” he says. The Consumer Financial Protection Bureau offers information in jargon-free language.

Shop the market.

“For a lot of individuals, this is going to be about survival and taking on more debt because government assistance isn’t enough to pay the bills. It’s still better than not having shelter or food,” Sheridan says. “I really like Bankrate.com. They have good advice, but it’s also a place where you can search nationally for the lowest interest rates. Make sure you don’t have loyalty to one financial institution. Make sure, with any loan, you’re paying the least amount of interest. That is always in your best interest.”