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The Rebound West Michigan: Where to cut spending and how to save with less income

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Posted at 8:02 PM, May 18, 2020
and last updated 2020-05-20 15:28:51-04

(WXMI) — Families are feeling the economic impact of the coronavirus pandemic, and the sudden issues in making ends meet.

Many are thinking about money now more than ever and are changing their spending habits to stay on top of bills.

“Our family income has pretty drastically been reduced right now so between layoff and then also just a reduction in hours as well for my husband,” Stephanie Martin said.

Stephanie Martin, a married mother of three, is one of many in Kent County dealing with that now unfortunately familiar scenario.

“When we started seeing the cut in pay, and we immediately had to just like reevaluate our budget we already do budget in the first place but had to like go through it again and just really reevaluate what's important what's not important,” Martin explained.

Martin and her husband took a proactive approach, immediately cutting out things like subscription services and the amount of times they were getting take-out.

Some cuts were made naturally given the current climate, by being home, they're saving a lot what they normally spent on childcare and gym subscriptions.

As a whole they are making sure everything they purchase is essential.

“I guess we're just really selective on what we do choose to spend on. In general, we're not spending a lot of money right now so it's really interesting to look at our, you know, credit card statement and realize how little you spend when you don't need to,” Martin added.

They also made changes to their retirement plan.

“We looked at 401k contributions and decided to put those on hold, so we're not contributing anything to that right now. I feel like, like there's a time to prepare for the future. Like many decades down the road and there's a time where you just have to focus on here and now and being able to just have your help your family,” Martin said.

“It's good decision. It's, it's not ideal in a vacuum but we're not in a vacuum. We're live in real life with real pain and so that decision they made a lot of sense,” Personal Finance Expert Peter Dunn said.

“The key will be when they get reemployed, hopefully soon, that they restart those contributions without too much delay,” he added.

“Pete The Planner” says every situation is of course different, but typically people can find themselves in three categories.

“Ultimately, there's three groups of people that are trying to make these decisions people who have already been greatly impacted, people who might be impacted and don't have savings, and then people who are unlikely to be impacted and have savings,” Dunn added.

If you are greatly impacted Dunn says you need to focus spending on the essentials and only the essentials.

“I think food is the first priority not in terms of, you know, extravagant food but the idea of sustenance, that you can nourish your body. I think rent is obviously very important or a mortgage payment is very important beyond that,” Dunn explained.

“Do not try to get out of debt, meaning if you've got consumer debt that you were paying down aggressively. Just pay minimum payments right now there's zero reason to lessen your debt burden right now because if you have extra money that money should be saved, especially because we don't know when or what happens at the end of the enhanced unemployment benefit come July,” he added.

But what if you are still employed and find yourself actually saving more than you normally do?

It's time to start building "stability."

“I think the first point of stability for most people if they want to get serious about being stable is a three-month emergency fund. That is to say whatever it costs you to live for one month multiply by three, that's your emergency fund so that takes priority over extra investing or something like that but emergency fund is definitely point number one,” he explained.

But his advice no matter where you fall, is to not put too much pressure on yourself.

“Your goal is to survive and be ready to rebuild because a lot of us have lost in this moment, lost dignity and income and everything in between and the other idea here is some people who've already won some financial battles, and their lives. They may have to re-fight that battle, you know, it will become undone, what they've already accomplished and that's hard for some people to realize that look we've already accomplished this once and it's broken now so we're going to have to accomplish it again," Dunn said.

"Just keep your head up and don't put too much pressure on yourself,” he added.