Legal News: How to Budget During the Pandemic

A Guide to Budgeting During the Pandemic

Seek relief from bills and prioritize spending during this tough time

by John Waggoner, AARP, April 16, 2020 

To some extent, the coronavirus is a budgeting force. Fewer people are driving, which means many are having to fill their tanks less often. Some auto insurers are refunding premiums as more and more vehicles sit idle. And those who are driving frequently, perhaps delivering groceries or commuting to an essential job, are finding low prices at the pump — regular unleaded gasoline now averages $1.84 a gallon, according to AAA, down a dollar from a year ago.

Figure out your current cash flow

If you or someone in your family has been laid off because of the coronavirus, your first step is to see how much money — if any — you have coming in. If you have applied for unemployment benefits, for example, you should be aware that if your employer laid you off because of the coronavirus, you can get an additional $600 per week on top of the unemployment benefits your state offers. Gig workers and the self-employed are also eligible for these benefits. If you haven't contacted your state unemployment office, now is the time to do so.

You may also be eligible for federal stimulus payments, which are already landing in some bank accounts. Individuals can get up to $1,200, and couples filing federal income taxes jointly can get up to $2,400. Those with dependent children under 17 can get up to $500 per eligible child. You can check with the IRS to see if your check is on the way, add information about dependents, or register for a stimulus check if you haven't filed a 2018 or 2019 tax return.

As a last resort, you can consider tapping your savings. If you have an emergency fund, well, this is what emergency funds are made for. The CARES Act also allows you to take up to $100,000 from retirement funds— penalty-free, if you're younger than 59 1/2. 

You'll still have to pay taxes on your withdrawals, but you'll have three years to pay those taxes, as well as three years to pay the plan back and avoid the taxes. Also, the limit on loans from retirement accounts has been increased to $100,000, from $50,000, and payments on both new and existing loans can be deferred for a year.

Prioritize your spending

Obviously, you need shelter and electricity, as well as food and water. And at least at the moment, corporations, lenders and landlords are in a forgiving mood, and many are allowing you a break on monthly bills.


For most people, the largest monthly bill is their rent or mortgage. If you're worried about making that mortgage payment, it's time to reach for the phone and see if you can get what's called forbearance: You and the lender agree to temporarily reduced or deferred mortgage payments, and the lender agrees not to foreclose during that time.

For example, if the Federal Home Loan Mortgage Corp. (Freddie Mac) or the Federal National Mortgage Association (Fannie Mae) backs your mortgage — and they do for about 80 percent of mortgages — the mortgage giants may offer forbearance for up to 12 months. 

Both companies have also agreed to suspend evictions and foreclosure sales for 60 days, through mid-May.

You can check online to see if one of the mortgage giants owns your mortgage:

Fannie Mae:

Search Freddie Mac:

If you're a renter, you may also get some relief. If you live in an apartment and your landlord gets mortgage relief because of the coronavirus outbreak, you can't be evicted for 90 days if you can't pay rent due to your own coronavirus hardship. Some cities, such as Los Angeles, Boston and New York, are putting halts on evictions. But if you're not covered by a state or municipal ban on evictions, talk to your landlord as soon as possible to discuss your options.