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I had planned a new post today about the subject of credit. But I decided to change it. The global pandemic caused me to take a totally different look at the importance of credit right now, mainly because having good credit has become way more significant today than it was even just a few days ago. Why? COVID-19, the coronavirus, that’s why.
They Say “Cash” Is King, But…
For almost forever, it seems credit and your credit rating have been at the center of the discussion when it comes to your finances. Long before I started writing about it myself, I knew that building up my credit would be important. Because one day I wanted to buy a house, a car, and lots of other “things” that I wanted and I would need my credit to help me purchase them. Despite the fact that at times, having credit can wind up getting you to overspend and landing you in trouble and big debt, if you use good common sense and control your impulses to spend, your good credit works for you.
The New Normal Is Chaos Right Now
I could have written once again about how you are judged by your credit and how to improve your credit score, plus the potential to get what you want and need without having to find the cash to make a purchase. I would have done that under normal circumstances and I am positive that the post I have ready about that subject will someday be appropriate to publish. But, right now, personal finances are chaotic for a lot of people and the point I want to hammer home is that if you somehow failed to heed all the warnings in life about the importance of good credit, you make be facing some serious problems on your radar screen!
You Can’t Change Your Credit “Past” But You Can Create Your “Credit” Future
There’s a trite expression that says “Today is the first day of the rest of your life” and despite the fact that you are probably frightened and confused about the future right now, you still must be prepared for it.
Because of that fact, take a good long hard look at your personal finances. Looking at your spending and priorities now, while you will have some extra free time on your hands, will help you in so many ways.
Staying Home and Missing Your Paycheck
Almost every day this past week, you heard about new recommendations or restrictions when it comes to going out in public and socializing, traveling, and the risks to you and your family when you do. New guidelines about your work and job may have been imposed and many people are being laid off right now. That means no work and no pay. In my area, “non-essential” business have been told to cut their staffing by 50%. Restaurants and bars are closed other than for takeout or delivery. In fact, the big boom business around these parts is ordering your groceries online and having them delivered to you.
Even that deed has been made “contactless” as they will leave your bags at your door (and not even knock when they do). I know because I had groceries delivered just this week and that happened. But, the good news is that my good credit made that so much easier for me.
Every personal finance blogger writes about the importance of saving up emergency funds. The situation we are now facing though has given it a whole new meaning. This isn’t your emergency or your neighborhood’s or even your county’s or your state’s emergency, but a worldwide emergency! What does that really mean? For one, it may mean a long-term situation that changes everything for the foreseeable future…maybe even forever.
Having money—cash and credit—is now the way to deal with two of the three most basic things in your life, food and shelter. But even if you have that emergency cash on hand, you probably don’t have an endless supply of it and that’s why having good credit counts.
Good credit can now be a huge band-aid for you when it comes to obtaining the things you need to survive until we see an end to the strain that COVID-19 is placing on all of us.
U.S. Government Intervention and Help
As I write this post today, our government has finally begun talking responsible actions in order to help people cope with the pandemic, as best that government can. They have actually passed some legislation that will help fund unemployment checks for some displaced workers as well as some new rules to help delay and prevent home foreclosures and payments of federal loans for a period of time.
Even more timely is that the next round of legislation will deal mainly with giving a cash infusion and payment of money to every citizen with only the numbers and the dates still be to ironed out. Cash, again, seems to be the answer that lawmakers think can solve our problems. For the short term, it does help. But in the long term, having good credit is just as, if not more important to you and your family.
Thinking Positive, Even Right Now
One positive effect of staying home and having some free time on your hands is that you can actually use that free time to consider everything you have ever thought about money, spending, and life itself. Prioritizing suddenly has become much easier and clearer, hasn’t it?
Your very first thoughts should now be on survival and health of you and your loved ones. Money, although still important to you, is strictly a tool to achieve those priorities. It is no longer your dream car or house or that fabulous vacation you wanted so badly just a few weeks ago!
Not spending your money except for food, clothing (if needed), and shelter, gives you a chance to actually save your money and spending wisely may actually force you to some new vision of your future. Wouldn’t that be a real unexpected benefit if it did?
Treat Your Credit Score Like Gold
Your credit score is your most valuable financial asset. So take good care of it. If the worst happens and you lose your job in a COVID-19 downturn, you may need to take out a personal loan or use a cash advance from your credit cards to make your house payment or cover an unexpected medical bill. If you have bad credit, it’ll be much more difficult to get a loan, especially at a favorable interest rate.
Aren’t sure where your credit score stands? You need to keep regular tabs on it, which used to cost money, but now it’s easy enough to see your credit score for free.
I’d advise you to focus only on what you need. It is going to be much harder to waste your money right now and that is a good thing. Buy what you need and use cash and credit wisely. That may mean making minimum payments to your credit cards for a while. Normally carrying debt would be a bad thing, but in our current situation, keeping enough cash while using your credit to keep you afloat may be the smart move.
If your credit score is already good, commit yourself to keeping it that way. If your credit score is poor, work as best you can to improve it as quickly as possible.
Do not use cash or credit unless if you have to do it. Certainly, pay your bills if you can on time and regularly because they are not likely going to be forgiven no matter how things progress.
More likely is that at some point, whatever you do spend will have to be paid in full and you don’t know exactly what will happen to your job, your employer, and the future economy, so err on the side of caution in all you do. Focusing on health and welfare never seemed like a better idea!
I am positive that every day is going to be a whirlwind of information and emotions and that the end of the story is far from written yet. That’s why a clear head and a real plan is so desperately needed. The situation is very serious, and you need to protect yourself and your family. This is not a drill!
So no matter what your credit history has been prior to COVID-19, now is the time to actually grow up and be the responsible adult in the room. That’s a room that is usually never crowded and wouldn’t it be nice to have to practice a little social distancing because it has suddenly become just that!
Please be very careful, stay home if you can, and stay safe and healthy. For more information on the COVID-19 coronavirus and how to protect yourself and your community, see the CDC website and the WHO website.