I will cut to the chase. We don’t know how long this will last – but each day means less money (or no money) to pay for essential items and greater fear. Here are my suggestions for the many, many people who have no cash reserves.

If you have available credit on credit cards – use it. Buy food and essential items, and take cash advances so you have cash to fall back on. Take the available credit before pulling funds from your retirement accounts (assuming you’re not retired and using these funds in retirement for this purpose). If you have a home equity line, I think you should draw the funds available and put them in savings. I don’t want you to use this money unless you exhaust the available cash and credit on credit cards. The reason to draw the funds is to protect yourself in case the banks shift gear and start slashing available funds on equity lines because real estate values fall (which could occur with the unknowns we are facing).

When this is over, the goal – which may be attained and may not – is to preserve as much of your retirement and home equity as you can. The debt on the credit cards can be resolved through Debt Resolution or bankruptcy alternatives in a way that you pay back none of it – or only a small percentage of the amount borrowed.

I know that some people will say you should pay back the money you borrow and pay the interest. If we lived in a normal world, where money was loaned at 5% – 9% interest, rather than 19% – 32%, and we were not facing a pandemic, I’d agree. But that is not the case. This is a fight for survival – and you and your family come first.

Good luck, stay home, abide by social distancing, keep the faith and look out for yourself.

Ken

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