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3 Ways to Increase Your Cash Flow During the COVID-19 Crisis

— June 10, 2021

If you’re experiencing severe financial hardship, there may be government assistance available to you, so remember to look into relief packages offered by your local, state, and federal government.

For many of us, 2020 felt like the year that would never end. While 2021 continues to show promise for better things, it’s not without its share of challenges. In the United States alone, the COVID-19 death toll is quickly approaching 600,000, with over 174,000,000 confirmed deaths across the world to-date. [Editor’s note: Data confirmed as of June 10, 2021, 4PM CEST.]

Both Europe and the U.S. faced multiple shutdowns in an attempt to slow the spread of the pandemic, placing millions of people out of work and, in many cases, without healthcare coverage at a time in which it may never be more critical.

The Pew Research Center conducted a study in August to understand the impact of the coronavirus outbreak on Americans’ financial circumstances, and although the labor market appeared to have partially recovered and the stock market reversed its losses, many people continue to face deep financial hardship.

We can see that low-income households were hit hardest, but according to the survey findings, pain points are experienced across the board:

  • 25% of all adults say they were laid off or someone in their household was laid off or lost their job due to coronavirus
  • 32% had to take a pay cut or reduce their hours at work because of the pandemic
  • 60% of the workers who lost wages due to COVID-19 are still earning less than they were before
  • 25% reported trouble paying their bills on-time or in-full
  • 33% had to use money from their savings or retirement account to pay bills

Savings can only last so long, and many people are watching their bank accounts drain while they earn less income or bring in no money at all. Between mortgages, rent payments, credit card bills, and the standard cost of living, an alarming number of citizens in the U.S. and across the world are experiencing the very pressing need for cold-hard cash.

If you’re like many caught in this predicament, we’ve compiled a list of three resources you may be able to use to increase your cash flow and supplement savings for greater peace of mind throughout this period of financial uncertainty.

Research Refinance Options

To protect the economy from further damage during the pandemic, the Federal Reserve took action by lowering its target for the federal funds rate by a total of 1.5% since March 3rd. This results in lower nationwide interest rates — ranging between 0% and 0.25% — on mortgages, home equity lines of credit (HELOC), auto loans, and other forms of consumer credit that require banks to borrow from the Feds.

If you’ve been financing the purchase of a home or car with a loan at a higher interest rate, you might be able to refinance the loan on better terms, thereby reducing the overall cost of borrowing. However, if you need more money to make ends meet throughout this economic crisis, refinancing may also give you the opportunity to replace your current loan with one that offers extended repayment terms. This would in effect lower your monthly payment, so you can keep more money in your pocket while times are tight.

Another way to capitalize on the wealth you’ve already accumulated is by obtaining a reverse mortgage. These are structured similar to refinancing — allowing you to access the equity you’ve built over time without the need to sell the home or vacate the property — but you have greater control and flexibility over how to receive your funds (lump sum, monthly installment, or line of credit), with the option to defer monthly payments throughout the life of the loan.

Offset Lost Wages as an Independent Contractor

Remote Working in Iceland Self-Portrait; image by Kristin Wilson, via
Remote Working in Iceland Self-Portrait; image by Kristin Wilson, via

An analysis of the survey conducted by the Bureau of Labor Statistics published in September found that at least 33 million workers have been hurt by the coronavirus recession, and these figures have only increased in the following months. If one among millions whose wages were cut, hours reduced, or job displaced, try looking into freelance opportunities within your industry.

Full-time, salaried positions with benefits might be hard to come by in these circumstances, but you may be able to earn income through consulting services, contract work, remote work, and one-off jobs. You can charge your own rate, take on as many clients as you can handle, and control your own schedule. That flexibility may prove especially valuable for parents who are presently tasked with overseeing their children’s distant learning at home, on top of their own workload.

There’s no shame in the “side hustle” — just ask any successful entrepreneur how they got to where they are — so be sure to research all the opportunities available to you within the gig economy.

Year-End Tax Considerations

Reevaluate your year-end tax strategy, as there are still changes you can make. A good place to start is with your investment portfolio, as can potentially save yourself thousands of dollars by carefully structuring your capital gains and losses.

Taxpayers are subject to a rate as high as 37% on short-term capital gains, or the profits made on assets held for less than a year, so you might want to reconsider selling some profitable positions for access to fast cash and hold onto them for a while longer to decrease your tax burden.

Alternatively, if you’ve been holding onto a stock that fell in price with the hope of it becoming more valuable in the future, you might consider selling it at a loss. You’re able to deduct up to $3,000 in stock losses to offset your ordinary income using Form 8949, Schedule D.

There are many variables that may come into play, so unless you’re experienced with tax code, it’s likely in your interest to consult an accountant so professional tax software can run all the numbers on your behalf.

In addition to harvesting tax losses on investments, a few other items on your year-end tax checklist include:

  • Use Flexible Savings Account (FSA) contributions
  • Defer any remaining income until next year
  • Pay off qualified business expenses

File your taxes sooner rather than later to receive your tax refund as quickly as possible. Even though you might have to wait a couple of months to see the savings come back, these strategies can help improve your financial standing.

Final Thoughts

If you’re experiencing severe financial hardship, there may be government assistance available to you, so remember to look into relief packages offered by your local, state, and federal government. Hopefully, these resources can help you recover financial independence and improve your quality of life in the year to come.

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