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by the editors of
April 09, 2020
by the editors of
April 09, 2020
You're stuck at home for the next few weeks, and local bars and restaurants are closed. There's no March Madness to watch. For many Americans, this is our reality for the next several weeks — or longer. And to make matters worse, you're swimming in financial dread as you fear (or perhaps have already experienced) job loss and helplessly watched the stock market plunge suddenly into bear-market territory. So, OK, go ahead and have a Netflix or Hulu binge-watching session -- you deserve it.
But when you're done watching, it's time to fight back. Money-smart Kiplinger readers will see this unprecedented period of home detention as an opportunity to get ahead with their finances -- to beat the market, to build defenses against scammers, and to pad their bank accounts. Take a look at 14 personal-finance projects you can undertake from home in the next three weeks.
A good starting point for your quarantine time is assembling all your accounts, passwords and points of contact. Couples should perform this task together and point each other to locations of key files and passwords.
Marilee Fitzgerald and Robyn Wagman co-founded Estate of Mine Organizers, a system for helping women — and men and couples, too — organize both personal and financial records. Their system includes checklists of must-have documents — a will, powers of attorney for financial and health affairs, bank and investment accounts — but it also covers facets of life other than financial: Where is the warranty for your new stove? The titles to your cars? The name of the furnace repair person?
Other aspects to this effort: Be sure your joint bank account really is in both names. Review and list all automatic debits and transfers from your accounts. Gather insurance policies. Review and update beneficiaries as necessary. Get a copy of each spouse's credit reports (more on that in a moment). Stash a copy of your will outside the safe deposit box.
With everything else that's going on, at least you don't have to worry about filing your tax return by April 15. The IRS extended the deadline to help taxpayers, and tax preparers, who are struggling with the coronavirus crisis. The new deadline is July 15, which applies to both return filing and tax payments. Penalties and interest won't apply if you pay any tax due before the extended deadline. This relief also applies to 2020 estimated tax payments that would otherwise be due on April 15.
You should also check with your state's tax agency to see if the filing and/or payment deadline for your state income tax (or other state tax) is changed because of the coronavirus crisis.
Still, you should file your taxes right away if you're getting a refund. Your quarantine time is a perfect opportunity to scour your records for overlooked tax breaks and deductions and safely file your return using a leading tax software program.
If you have a health care flexible spending account (FSA), review its balance and rules. Some accounts still require that you forfeit anything left over at year-end, but most will either allow you to carry over up to $500 or offer a grace period for claiming expenses for the previous year. Many plans' grace periods just expired on March 15; if that's the case for you, then your quarantine-time assignment is to plan your 2020 FSA spending and to set a calendar reminder in early 2021 to make sure you use all your saved funds.
If you still have limited time to use your 2019 FSA cash, start by reimbursing yourself for eligible expenses that you didn't claim earlier.
You can use the money to pay for out-of-pocket medical expenses, including deductibles and co-payments, as well as uncovered dental and vision expenses. Beyond that, stock up on FSA-eligible products that you'll use in the coming year, such as contact lens solution, first aid items, and hearing aid batteries.
Serious investors set goals and create an investment plan to meet them. Use your quarantine time to consider and write down your goals for your portfolio if you haven't already. Goals can be short-term or long-term. A short-term goal might be a new car. Long-term goals could be sending kids to college, retiring comfortably or leaving a legacy to your heirs.
Setting goals is important because time is a crucial element in investing. Use long-term investments, such as stocks and bonds, to achieve long-term goals. Use cash and other safe, interest-bearing investments for short-term goals.
Portfolios can get especially out of whack following a sudden move into bull- or bear-market territory, as we've experienced in reaction to the coronavirus outbreak. Regular portfolio maintenance that reshuffles assets to make sure they reflect the division you've chosen--a process known as rebalancing--can minimize risk and keep you on track with an allocation appropriate to your goals. Rebalancing works by trimming asset groups that have performed relatively well and adding to holdings that have been relative laggards.
Many of you may have been temporarily cut off from your full- or part-time job as the coronavirus forces businesses to scale back or shut down for weeks. We've rounded up plenty of legit moneymaking opportunities for you to capitalize on at your convenience, with the perk of no long-term commitment and, in most cases, setting your own hours. Plus, you can keep a healthy social distance away from others while you work these gigs. Some are good for a fast buck, while others could turn into consistent streams of income.
For instance, kill some time with a search for unclaimed property in your name — tax refunds that are returned because of mailing-address errors or that are never claimed by taxpayers because they didn't file returns ... forgotten savings bonds ... government-guaranteed mortgage-insurance refunds ... government pensions that were never claimed ... returned utility deposits ... uncollected insurance benefits ... stock dividends ... and more. Kiplinger online editor Bob Niedt reeled in $134 when he did this in 2017.
Another quarantine-time winner: Earn $5 to $60 per case as an "online juror" helping lawyers to sharpen their cases.
With everything you're expected to keep up with in a day, it may help to find ways to make your life a little easier here and there. Use your quarantine time to simplify, streamline and organize your financial life to free up both time and cash.
For instance, slim down your portfolio to a mere one to three mutual funds, or put your retirement savings on auto-pilot with a target-date fund.
Combine your insurance, or consolidate your credit-card balances.
A credit freeze prevents new creditors from reviewing your credit report, making it harder for identity thieves to take out credit in your name. For it to be effective, you'll need to contact each of the credit bureaus separately to initiate a freeze. Both placing and removing a freeze is free.
Once you request a freeze either online or by phone, the new law requires the credit bureaus to implement it within one day. And if you ask for the freeze to be lifted, the credit bureaus have one hour to do it. "That is the law's maximum time, but for most people setting the freeze online or by phone, it will be pretty close to instantaneous," says Francis Creighton, the president of the Consumer Data Industry Association, a trade organization for credit bureaus and other consumer reporting agencies.
The freeze remains in effect until you take steps to remove it — either temporarily or permanently.
It's smart to set up an online account with Social Security even if you're years from retirement. Once you've done so, identity thieves will be unable to create a fraudulent account in your name and use it to apply for benefits. In addition, you can check your earnings history against your W-2 forms or tax returns to make sure there are no gaps in your earnings record that could reduce your Social Security benefits. You can also look up estimated retirement, disability and survivor benefits and, in certain cases, request a replacement Social Security card.
To set up an account, go to www.ssa.gov/myaccount. You'll need to enter some personal details, answer questions to confirm your identity, and choose a unique username and a complex password.
Security experts have warned for years that to protect our online accounts we need to change passwords frequently and make sure that those passwords are "complex"--meaning filled with letters, numbers and random characters. Yet many people continue to rely on weak passwords, such as "123456," "password" and "qwerty." And even the best passwords are easily compromised if you write them down.
Use your quarantine time to sign up with a password manager that will store all of them behind one master login--the only password you'll need to remember. A password manager can also help you create strong, unique passwords for each of your accounts. Passwords generated by the service will still be long, unpredictable and impossible to remember. But that's okay because you'll never need to type them in yourself.
To add another layer to your security network, enable two-factor or multistep authentication on any account that allows you to. You'll enter your username and password as usual, but the account will then confirm your identity each time you log in by asking you to enter a code that has been sent to your smartphone or e-mail address. The extra step deters hackers, and you'll know if an intruder attempts to log in with your password.
No matter how much you try to swat them away, pesky fees keep nibbling at your travel bookings, wireless plans, bank accounts, investments and pretty much every other part of your financial life. Although the fees may not seem like much on their own, they can add up to hundreds or even thousands of dollars a year, putting a big dent in your wallet. Invest a few minutes of your quarantine time to eliminate even just a few fees in your life, and you'll reap the benefits month after month.
For instance, review your wireless bill for services that you don't want or never requested. Verizon, for example, offers new customers a free trial of its cloud storage service for 30 days, then charges $5 per month if you don't cancel the subscription before the trial ends. Verizon customers who activate a new Android device also get 30 free days of premium visual voicemail service, which comes with a $3 monthly fee if you don't unsubscribe after the free period.
If bank fees are your nemesis, spend the time to evaluate and switch to a free checking account from a leading online bank.
You may already need a new job, or maybe you're worried about the stability of your current one in this expanding crisis. Start your search now, while you have the freedom at home to do so without your boss looking over your shoulder. We recommend tapping into your network: Connect with former colleagues and industry peers over e-mail and on LinkedIn, and give them a call. People may really relish the human interaction with you during this time.
Spruce up your LinkedIn profile and make sure recruiters know you're looking for a change. Scour job postings on LinkedIn and other networks to identify the types of skills potential employers are seeking, and tailor your profile and your resume to reflect specific keywords within jobs you might pursue. Resist the temptation to e-mail dozens of resumes before breakfast every day. Instead, create a template and customize it to suit each job you're applying for.
If you haven't reviewed your credit reports lately, head to www.annualcreditreport.com, where you can get a free report from each major credit bureau--Equifax, Experian and TransUnion--every 12 months. Look for suspicious changes, such as a credit card account or mailing address that you don't recognize, which could mean you've been the victim of ID theft. If you find a problem, take steps to clear it.
Already claimed your annual reports? Take advantage of other ways to view your reports for free. By creating an account at https://my.equifax.com, you can access an Equifax report and VantageScore credit score monthly. With Experian's www.freecreditscore.com, you can see your Experian credit report and FICO score monthly. And TransUnion's www.trueidentity.com allows you to pull up an updated TransUnion credit report daily.
Don't let missing or shrinking paychecks spiral out of control. It's important to keep your creditors informed of your changing situation. So if you do hit a financial crisis, your mortgage lender, bank and credit card issuer may let you pause or lower your payments.
Use your coronavirus downtime to make sure you're fully covered against life's other challenges.
By far, the biggest asset most people will ever have is their ability to earn a paycheck. See if your company offers long-term disability insurance. If they do, that's a great start. Understand though that having it at work might not be enough. Often, group plans are limited to 60% of your income up to a maximum $6,000 benefit per month. Also, the coverage is only helpful as long as you stay at that job.
Next, no one needs to tell you why you should have life insurance: If you die and your family or anyone who depends on you for support could no longer count on your income, life insurance would replace that income -- assuming you choose a policy with the amount of coverage that is right for you. For most people, term insurance makes the most sense and, dollar for dollar, gives you the most protection for your money. To determine how much coverage you need, the rule of thumb (buying coverage equal to seven to 10 times your annual pre-tax income) and calculators provided by the insurance industry are a handy starting point.
However, a more reliable approach to determining the right coverage is to add up the income your family would need to cover ongoing expenses as long as they need it (say, the number of years until your youngest child graduates college); the estimated cost of sending your kids to college; your debts; and final expenses at death. Then subtract savings, college funds and other life insurance policies. Finally, adjust the amount to reflect your situation. For example, you may want to increase coverage if a stay-at-home parent provides child care.
And take some time to evaluate all the special discounts your car insurer may offer. If you qualify for any, reach out to your agent to lower your premiums.
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