State Comptroller Peter Franchot has one piece of advice for people during the coronavirus pandemic: Call your creditors and ask for a four-month deferment.
“I encourage every Marylander and every small business to preserve what cash they have because you’re going to need it to protect your family and your ability to reopen your small business. Cash is king,” Franchot said. “Do not send it out of your pocket; keep it in your pocket, but make sure you communicate with the creditors.”
The coronavirus has already had huge impacts on the economy nationwide, including 3 million people filing for unemployment benefits this week and the Dow Jones industrial average plummeting record numbers of points.
And those effects are felt in Frederick County and Maryland, with 42,000 unemployment claims last week in the state, Franchot said. On average, the state receives only about 2,000 jobless claims per week.
He said that the state could see a 25 percent unemployment rate and a 25 percent decrease in tax revenue. While he’s not actively predicting those numbers, he does think they are possible.
Although Franchot said that he is concerned about the state, county and city budgets getting back on track, he’s more concerned about people who have bills to pay, and small-business owners. That is why he recommends that everyone ask for a four-month deferment on bills such as their mortgage or rent, health insurance premiums and credit card bills.
He believes that about 90 percent of creditors will be supportive and understanding.
“But I’m very confident from my conversations with business leaders around the state that the financial institutions are ready to be supportive of even the littlest guy who says, I’m 75 years old, I have [a] $1,000 rent bill, I have a $500 credit card bill, I’ve got a $200 utility bill, I’ve got [a] $100 insurance payment. That person should pick up the phone and call each of those creditors and make the ask.”
For the odd 10 percent of financial institutions that won’t be supportive, Franchot recommends calling his office or the state’s attorney to have the matter handled. He believes that everybody should have the option of having their bills deferred — even if they can afford to pay them.
“Wealthy people do this as a matter of habit. They don’t pay their bills when there’s an emergency. They get forbearance,” Franchot said. “So should everyone else. But you have to ask.”
While Franchot is supportive of the federal and state governments’ stimulus programs, he thinks that they are confusing and won’t be ready in time to meet Marylanders’ basic needs.
“If they can figure out the alphabet soup of federal and state agencies that supposedly have free money and grants and loans, have at it,” he said.
Deferments will help Marylanders keep the cash they have in the bank instead of spending and then waiting for a grant to come through, or for grant money that will then have to be repaid later.
“I don’t think small businesses need more debt right now,” Franchot said.
For many residents, the stock market is of increasing concern, especially for those who are looking toward retirement. Scott McCaskill, certified financial planner and owner of McCaskill Financial Planning, said that many of his clients are seeing the dip in the stock market reflected in their savings.
He suggests that they talk to their financial adviser, and if they do not have one, to sit down and take a look at all their investments and see which ones they can change.
“Now, I would never recommend someone just to cash out and walk away at a low point in the market, but it might make sense to take a look at your investment to see if it’s a good investment for you,” McCaskill said.
He said the stock market will recover, as it did after epidemics such as SARS in 2003. He and his employees have actually been planning for such a dip, as the market has been in a healthy state for the last 11 years and was expected to drop sometime anyway.
McCaskill has tried to diversify his clients’ portfolios by also investing in real estate, gold and bonds instead of just stocks. Franchot wants one piece of advice to stick with Marylanders: Save as much money as you can.
“I know it’s a little strange for a tax collector to say ‘don’t write checks,’ but that’s it,” Franchot said. “Look after yourself here, because it’s a tornado coming down the pike and it’s approaching Maryland. And we’re sadly going to have to muddle our way through.”