Why you should pay your rent or mortgage during the COVID-19 crisis

The health and economic ramifications of the coronavirus outbreak seem to get worse with each passing day.  Despite a massive stimulus plan passed last week, retailers announced the furlough or layoff of approximately 600,000 workers.  Top management at many firms are taking huge pay cuts for the time being and even corporate-level employees are getting laid off.  So it seems that paying rent for so many of these people should be the last thing on their priority list, right?

Wrong. 

Even if you don’t have the cash to make your April 1st, 2020 payment, on-time, whether for rent or mortgage, you should try to reach out to your landlord or mortgage servicer and let them know today, rather than in two weeks.  While the ramifications of the COVID-19 outbreak aren’t your fault, they also aren’t your landlord’s fault.  Landlords, and even the large companies that own apartment complexes, depend on rental income to pay their employees and put food on the table.  They are still obligated to fix your unit if something goes wrong and maintain the grounds whether that entails plowing snow or greening up the grass as spring arrives. 

But I lost my job and was living paycheck-to-paycheck before all of this happened!

This situation is totally understandable, and millions of Americans are feeling the pinch.  It is estimated that 78% of U.S. households live paycheck-to-paycheck.  However, you should have applied for unemployment benefits and with the increase of up to $600 per week in benefits, you should be able to make good on your rent between that and your stimulus check due in about three weeks if you received your last tax refund via direct deposit.  Sit down and make a budget.  The first thing you need to do is eat, second, pay utilities, and third, pay rent or your house payment.  If you are in a bad predicament, don’t be afraid to take advantage of food stamps or local food bank programs.  It may be a hit to your pride, but help is out there if your situation is so bad that you have to choose between food, heat, or paying to keep the roof over your head.

Turn your financial life around!

If you are scared and worried about your finances and cannot make good on your obligations, this is the best time to turn your financial life around.  Visit Dave Ramsey’s site to get tips on turning your finances around.  Not being able to pay your rent should scare the living daylights out of you and make you want to question how things got so bad, so quickly.  While it is nice that many governors and mayors have outlawed evictions, foreclosures, and late fees for the next 90 days, eventually, you will have to pay the piper.  I’m sure you have heard the saying “there’s no such thing as a free lunch.”  The same applies for rent.

Think about the big picture

When you don’t pay, you are contributing to the continued slowing of our economy.  Believe it or not, it’s not just big shots on Wall Street who have investments.  Most mortgages are securitized and managed by real estate investment trusts, or REITs, which have issued stock and are owned by little people through mutual funds in 401(k) plans.  Moreover, if the Fed buys mortgage backed securities to get more cash into the economy, it’s the taxpayers (you and me) who are on the hook when people don’t pay.  So do what you have to, but try to pay for your housing as soon as you can.  With dedication and perseverance, our situations will improve, and hopefully your financial habits will change for the better so you can weather the next economic storm with a healthy savings account.

Leave a comment!

If you lost an income stream or have seen a decrease in pay, what are you doing to keep your bills paid? 

Author: wvance3

William is a corporate Accountant by day and a lover of Great Danes, gardening, personal finance, and home projects at night and on the weekend.

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