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Advice for paying bills in a pandemic

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UGA expert offers strategies for people finding it hard to pay bills.

The COVID-19 crisis is having real effects on household finances. Some families and individuals will have to make difficult decisions about how to pay bills.

Brenda Cude, the Georgia Athletic Association Professor in Family and Consumer Sciences at the University of Georgia, offers some strategies for managing these difficult circumstances.


Brenda Cude

What should people be thinking about in terms of making payments? 

 Many companies are willing to make accommodations during the pandemic for individuals who find it difficult to make payments, including credit card payments, car payments, rent or mortgage payments, utilities (including telephone and internet), and even student loan payments.

A first step is to check your email and other mail for any communication from a company about options if you’re finding it difficult to make payments. If you don’t see anything, get in touch with the company and ask about your options.

How should people prioritize if they are unable to handle all of their payments?

 Individuals and families who are having trouble paying bills should prioritize the payments that keep them safe and employable. That usually means paying the rent or mortgage, utilities, car payments and tuition expenses.

Once you know which companies are willing to make some accommodation for the current situation, learn more about what that accommodation is. Companies are using the terms “deferred,” “waived” or “suspended.”

Typically, a deferred payment is one that you’ll be expected to pay later. For example, if your mortgage payment is deferred for three months, that likely means that in the fourth month, you’ll owe four months of mortgage payments. Perhaps you’ll have more income by then and can make those payments—but think that through carefully.

If a payment or fee is waived, that typically means you won’t owe it. So, for example, the bank may defer your mortgage payment for three months and waive the late fees for those three months.

Payments on federal student loans have been suspended until Sept. 30, 2020. That means you don’t have to make your student loan payments (but you can).

In October, you won’t owe the student loan payments you missed. The interest rate on your balance will be set to 0% until the end of September. This applies only to federal student loans—not private student loans.

How forgiving can we expect companies to be with payments? 

At least 21 states are urging utilities to suspend disconnections. If you’re having trouble paying your utility bill, call the company.

What should we be thinking about long term?

This is a great time to organize your finances.

If you’ve never had a written budget before, make one.

Keep it simple.

What will your income be for the next month? What expenses are the most important? Do you have enough money to pay those? Will you have money left after you pay those? If you already have a budget, how do you need to change it?

Self-isolation can be a great opportunity for you to also reduce your spending. But try to also think long term. Think very carefully before you raid your retirement funds, for example, for day-to-day expenses.

Four takeaways

  1. Focus on payments that keep you safe and employable
  2. Research which companies are making missed payment accommodations
  3. Know your terms:
    — “Deferred” are typically payments expected to be paid in full later, possibly all at once.
    — “Waived” typically means you don’t have to make payments for a period of time, no late fees
    — “Suspended” payments are ones where the clock is stopped — you won’t owe the payments later and may not owe interest on missed payments.
  4. Use this time to organize your finances