Make Lemonade Out of Lemons: Coming Out on Top of the Current Crisis
✦ 7-minute read ✦
The present-day reality of a slowing economy, growing unemployment and mostly instability, is extremely challenging. But every challenge is an opportunity. Here’s how you can seize it.
With the complex situation the world is currently experiencing, it can be hard to see the silver lining.
By focusing on the negative, all we will see is how bad everything is. However, if we change our focus, we can change the way we see this crisis and start to understand how we can capitalize financially on this pandemic!
The truth is, there is an opportunity in every bad situation. For instance, a drop in the stock market means bargain prices for people who are willing to buy. Every low point is followed eventually by a high point. It’s changing the perspective on money that will lead us to take advantage of the lows as well as the highs.
Therefore, we wanted to offer actionable ways you can take advantage of the current economic crisis that will benefit you in the long run. Just like people are hoarding toilet paper and other goods, very few are willing to invest any money. What if we invested in the rough times and sold during the good times instead of the opposite?
Here are some of the top ways you can take advantage of the Coronavirus and move into a better financial position when all is said and done.
Revise Your Mortgage Terms- NOW!
Want to pay off your mortgage faster?
By refinancing to a 15-year fixed mortgage, you can cash in on interest rates that are hovering between 2% and 3% right now! With these historic lows, refinancing your mortgage now may set you up to save 10's of thousands of dollars over the life of your home mortgage loan.
A refinance makes perfect sense if you originally acquired a loan at 5% or more, and you still have many years left on your mortgage. A refinance will cost you a few thousand dollars, but if you can cut the life of your loan in half and lower your interest rate at the same time, that’s a big win!
Avoid refinancing and adding additional years onto a loan. This not only increases the amount of time you will be in debt, but the extra time can also add a substantial amount of interest to the loan.
Avoid falling for the shady math of refinancing companies, and be sure to run your own calculations. Remember, refinance companies stay in business because they make money off you: But for you, it only makes sense if you’re going to be saving money in the long run.
Note: Before opting for a 15-year mortgage as opposed to a 30 year, make sure you can afford the higher monthly payments and have an adequate emergency fund. You can always pay extra on a 30-year loan when times are good, however, you can't pay less than the minimum payment on a 15-year loan when times are bad.
Ready to take charge of your mortgage terms? Compare top mortgage lenders:
Quicken Loans offers up to $3 million in loans for qualifying borrowers, and both the application and approval process go very quickly due to the top-rated technology Quicken Loans uses. Rates are updated on a daily basis, so don’t be surprised to receive different quotes on different days. The upside is, Quicken offers a large variety of mortgage options, including 15 year options, and has specific loans for low-credit situations.
- Minimum down payment of 3% on government back loans, 5% on conventional loans%
- Fast online application
- Live chat
Best for: Tech-friendly borrowers who want access on all their devices
Best perk: Low-credit option
RefiRateGuide is a loan marketplace that allows you to search its network partners and find the mortgage that’s best for you. Using RefiRateGuide is free and doesn’t affect your credit score, which means you can search risk-free. What’s more, because it has so many partners, you can find the best loans to suit your specific financial situation and repayment needs.
- Fast & easy-to-use
- One form for multiple lenders
Best for: Borrowers looking to compare rates and options quickly
Best perk: Comparing won't impact your credit score
Consolidate Your Debt
If you have massive amounts of credit card debt with high-interest rates, now may be the perfect time to consolidate them into one payment with a lower interest rate. Keep in mind that consolidating and refinancing your credit card loans will also result in additional fees. Still, the amount of money you will save in interest is something to consider.
Some people play the game of moving funds over and over again to different 0% interest accounts. The question I would ask is if that person is ever going to actually get out of debt or just become good at shuffling their debt around.
Make a plan to get out of debt by refusing to make other people rich. List your debts on a piece of paper and make a plan to get out of debt and start building wealth — on your terms.
Refinance Your Student Loans
If you have significant student loans and are struggling to make the monthly payment, student loan rates have been steadily decreasing. Now is the perfect time to take advantage of the dip in student loan rates, which are hovering around the low 4% marks if you currently have a high-interest student loan.
Keep in mind that the purpose of a refinance is to save you money in the long run. If you have 11 years left on your student loans and you refinance back into a 30-year loan, that probably isn’t the best financial decision. Not only will you be stuck paying a loan off for additional years, but you’re also tacking on years of interest.
If you have 11 years left and can refinance into a 15-year fixed rate loan with a substantially lower interest rate, you may be able to save several thousand if not 10's of thousands of dollars by doing this. Be sure to crunch the numbers to see if you will be saving yourself money or making someone else wealthy.
Fund Your New Business
When markets are down, people struggle to spend money or make any significant changes. Similar to the stock market, now may be the perfect time to start your small business. When the economy tanks, often banks are willing to provide small businesses with loans to stimulate the economy and to make money.
Currently, the prime rate for a Small Business Administration 7(a) loan is a low 4.75%!
In economic crises, many businesses will lower their profit margins to make a sale. People working strictly off commission often reduce their commission amount to at least make something. So, if you ask for a discount, you may be surprised by how many retailers are willing to give you one. Asking never hurts, and you never know how much you could save if you don’t try!
Don't Sell Your Stocks!
As tempting as it may be, do everything you can to avoid letting your emotions get the best of you. So many people sell when they see their retirement accounts dropping in an attempt to stop the bleeding. When they do this, they usually miss the steep rebound that inevitably comes after the market lows.
Remember, investing is a long-term game. Put your money in your retirement account, preferably an index fund, and let it ride. Don’t move your money based on panic or fear.
Most Importantly: Stay Calm
Whatever financial position you are in, focus on staying calm. Our emotions usually push us to make poor financial decisions because we act with our hearts rather than our mind. Take your time to evaluate your current situation and listen to what the math tells you. If you would save money by refinancing, then do it. If the math doesn’t work out on paper, avoid it.
Trust your instincts, but verify that your decisions are based on facts rather than hunches. There are many different ways to capitalize on the current situation. To take advantage of them, you may need to reshift your focus: Remind yourself to always be open to new opportunities to see the positive inside the negative.