Just about every lender—credit card companies, mortgage lenders, student loan servicers, and others—has been offering some sort of assistance for their borrowers who have been affected by COVID-19. That may take the form of deferred payments, waived interest and fees, or additional help in qualifying for personal or small business loans.
If you are struggling financially, it’s always better to reach out to your lenders as soon as possible, rather than fall behind on payments without contacting them.
Another option might be taking out a personal loan or small-business loan. These should be used primarily as a last resort and only if you have a realistic belief that your situation will be markedly better before too long. Otherwise, you run the risk of getting into even deeper debt.
Instead of (or in addition to) financial help from the government or your lenders, you may have some do-it-yourself options.
One would be a 401(k) loan or hardship withdrawal if you have a significant balance in your account. In general, it’s best to avoid touching your 401(k) before retirement, but in a serious financial crisis, it might be your only option. The CARES Act changed the rules for 401(k) loans and withdrawals to make them less punitive, such as by waiving early distribution penalties and allowing account holders to delay making loan repayments.4 The Consolidated Appropriations Act, signed into law on Dec. 27, 2020, allows Americans to withdraw up to $100,000 from their 401(k).
On a more everyday level, you might also take another look at your spending to see if there’s anywhere you could still cut back or any major expense you might put off, at least for the time being.
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