Midyear Review

Summer is here! With the year already half over, now is the time to take a look at your financial situation and assess how you’re doing so far. Midyear reviews are always sensible, and with all the uncertainty around personal finances since the start of the pandemic, in 2021 a review is more timely and important than ever.

Vaccinations are now readily available and the pandemic is abating, but that doesn’t mean that the impact the coronavirus has had on your finances—whether positive or negative— has come to an end. So now is the perfect time to take stock of where you stand.

For many people, social distancing and forced quarantining eliminated a chunk of expenses—from social outings and entertainment to things like gym memberships and even after-care costs for working parents—allowing people to save more than they would in a typical year. As people eagerly look to resume their previous activities, it’s a good idea to examine some of the costs you were able to eliminate during social distancing to see whether it makes sense to bring them back, or if you can maintain a higher savings rate moving forward by continuing to forego some of those expenses.

If you’re able to sustain a higher savings rate, consider funneling some of that extra money toward long-term savings that can yield higher returns, such as 529 college savings accounts or additional retirement contributions. Another approach to consider is to make additional principal payments on your mortgage. Paying just a couple hundred dollars extra each month can yield major savings on the total interest you will pay during the life of a loan, and can even cut years off the repayment time.

If you’re among those whose finances were negatively impacted by the pandemic, there are multiple things you should be taking a closer look at now—particularly if you are one of the millions of people who lost a job and have relied on federal programs such as unemployment benefits.

The increased federal unemployment benefits that many people benefitted from through the CARES Act and the follow-up American Rescue Plan are set to end on September 6. Colorado will keep the extra $300 a week for people on unemployment insurance until then. If you have been relying on this additional money, determine what changes you will need to make once the standard unemployment benefits in your state resume, and adjust your budget accordingly.     

Now is also the time to investigate other changes making their way down the pipeline. While COVID-related eviction moratoriums remain in place in many states, these, too, are likely to change soon. If paying your mortgage or rent is a problem, make sure to familiarize yourself with the current rules where you reside and look into any ongoing assistance programs that may exist.

For renters, one route to investigate is the possibility of lowering your rent payment once your lease is up. Rental prices have fallen in many parts of the country and many landlords would rather lower the amount they are receiving from existing tenants rather than lose those tenants to lower-priced apartment options. Though you may not succeed, it’s certainly worth asking. Just keep in mind that if you go this route and are prepared to move to a less expensive apartment, remember to factor in moving costs. Also, landlords typically run an employment check on new tenants, so if you are currently unemployed, this may not be an option. If you own your home and are having trouble paying your mortgage, reach out to your bank to see if there are any arrangements they are willing to make for you. Banks are far more likely to work with you if you reach out before you are unable to pay, rather than after you have defaulted on a payment.

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