If you’re one of the sectors that were shut down amidst the COVID-19 crisis you might be panicking; especially if you’re a small business that was counting on income from events in March, April, and May.

This is a wake-up call for so many self employed people on the importance of having 4-6 months worth of expenses saved. I know that’s not the reality for many people right now and while you should definitely start building up your savings that doesn’t help with the short term problem of staying afloat through our current economy.

While I’m not a financial advisor or an accountant these are the steps that I’m taking right now to protect my photography and real estate business.

Write down all of your expenses. Every last one from your mortgage to your daily Starbucks drink. Go through your recent bank statements to get a clear picture on what you’ve been spending.
Next go through and see what you can cut out right away. Maybe it’s a stitch fix subscription, education subscription, meal delivery, eating out, cable, or even Netflix.
Now make a list of expenses that you absolutely must pay (Mortgage, heating costs, electric, water & sewer, student loans, child support, health insurance, car payments, credit card debt etc) In the next column write down things that are necessary but you can cut out in an emergency (CRM’s, email providers, recreational activities, gym memberships)
Next let’s go through your necessary expenses and find a way to reduce their cost. The biggest expenses tend to be: Housing, transportation, and food.
Let’s talk about housing first
If you rent: Can you move somewhere cheaper? Can you move in with family or friends? Can you get a roommate? If you think you’re going to have trouble paying rent on April 1st talk to your landlord now. Some of the bigger landlords in Boston have put a freeze on evictions for the next month or two. Be honest about your situation and try to make an agreement now.
If you own: Can you get a roommate? That’s the easiest way to cut down on your monthly housing costs. We’ve had a roommate since we bought our house. I don’t particularly like living with a roommate but I do like the monthly income. If you do get a roommate make sure you do a background check (Cozy offers background checks and automatic rent collection) and draft a month to month lease at the very least. You can find lease examples online. I also recommend collecting a security deposit.
If you don’t think you’ll be able to pay your mortgage call your lender immediately.
It’s easier to work out a repayment plan now than once you’re late. Mortgages are due the 1st of the month and you have until the 15th to pay without incurring a late payment. If you’re 30 days late you’ll go into default and that will be reported to the credit bureaus. More information about what to do when you can’t pay your mortgage can be found here.
Now let’s talk about transportation
If you have a car do you own it outright or do you have monthly payments? If you financed a brand new car talk to your dealership on your options for trading it in for something cheaper. If possible try to find something you can buy outright with cash. Maybe you could sell your car and use public transportation for now.
That brings us to food
Hopefully you’ve stocked up on enough non perishables to last you a few weeks. Eat what you have in your house before you buy more food. Try not to get takeout or meals delivered. There are cooking websites where you can enter the ingredients you have on hand and it will give you recipes. Google “cheap healthy meals”. Shop the sales. Stop consuming alcohol if that’s a big part of your food budget (this isn’t forever, don’t freak out!)
Now let’s talk about expenses like heating, electric, student loans, phone plans, and health insurance. Contact your utility company and see what assistance programs they offer. Turn your thermostat down a few degrees. Turn it even lower at night. Be mindful about what lights and appliances are kept on. Ask your gym if you can temporarily suspend your membership. If your income has changed drastically call your health insurance company and ask if you qualify for a less expensive plan or mass health assistance. Call your car and home insurance and ask if there’s any way to lower your rates. Switch to a cheaper phone plan. Call your student loan provider and ask if you can defer payments or go on forbearance for a few months. They also have income based payment plans.
Once you’ve figured out your expenses and what you can cut out let’s look at your projected income. This can be hard to figure out if you have a lot of cancellations/reschedules. If you have money in savings make a plan on how you want to allocate that money in the coming months. Allocate money towards your most important bills first: Mortgage, child support, utilities, student loans, etc.
This is also a good time to take inventory of your skills and figure out a pivot plan. Do you teach classes in person that you could give online? Can you create an online course in your area of expertise? It’s important to consider how your client’s pain points have shifted and how you can serve them in a new (and remote) way.
Lastly if your employer has shut down or you’re completely out of work you can try and file for unemployment.

I know this is a scary uncharted time. I don’t know what’s going to happen in the future or what the economic impact will be. I also know there are always solutions even if they’re not what you want. If you have to close down your business for now that doesn’t mean that you’re a failure. In some seasons your’re thriving, in others you’re surviving.

If you need someone to talk to or you’re feeling desperate please don’t hesitate to reach out to me. hello@ericapezentehomes.com 508-494-7817