Financial challenges, solutions heading into new year
For people still facing the financial impact of the COVID-19 pandemic, there are some ways to keep more money in your wallet.
MADISON, Wis. (WMTV) - Heading into 2021, many people are still carrying the financial impact of the COVID-19 pandemic into the new year.
“Everyone is hurting,” said Jeff McKee, UW Credit Union Sun Prairie assistant branch manager.
McKee said he saw many people changing their financial strategies in 2020, even those who were not hit quite as hard by the pandemic.
“What we’re seeing from those folks is that they’re contributing to their savings at unprecedented levels. With market volatility and economic turmoil, people are hiding money away in savings accounts if they have it and they’re paying down balances on debts,” McKee explained.
For those suffering financial strain, McKee said they have had to make increasingly difficult decisions.
“They’re doing things like seeking out loan deferments and forbearance on loans. They’re selling off assets like vehicles or TVs,” McKee said, adding, “They’re choosing which bills to pay.”
McKee said many people also had sudden financial costs due to canceling events like weddings and the unexpected death of loved ones from COVID-19.
“A lot of them are trying to deal with the aftermath of that, the financial aftermath of that, without having planned for these types of events,” he said, explaining, “If there’s not a will in place and there’s multiple family members trying to determine who is the next of kin or the personal representative, there can be some strife there.”
For people whose finances took a hit during the pandemic, there are still opportunities to keep a little more money on hand, especially when it comes to filing taxes.
“Hopefully, if you’re working with a tax preparer, these individuals are going to catch these things for you,” said Kyle Frizzelle, tax expert and attorney at NC Planning.
Frizzelle said one of the biggest opportunities is the Earned Income Tax Credit. With many facing lost income in 2020, more people could qualify.
“If you qualify for it, it actually can offset the tax bill completely or push you into a higher refund,” Frizzelle explained. He added, however, that unemployment money is taxed, including the extra benefits extended by the federal government in 2020.
Frizzelle explained tax credits are also available for money put in a personal retirement account or for going back to school, credits most people might not know about.
“There’s a lot of people who will miss this simply because they’re not looking for it,” he said. For people filing their own taxes, Frizzelle recommends looking through all possible deductions and credits.
Financial institutions can also offer some help. In 2020, UW Credit Union offered emergency loans and worked with members struggling to make existing payments. McKee said they are already looking for ways to help in 2021.
“We encourage you to reach out to your bank or credit union before you get behind,” he said.
McKee also cautioned UW Credit Union has seen a rise in scams during the pandemic. He warned people not to give out personal financial information unless they are sure a request is legitimate.
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