March 17, 2020 - Sumaya Mulla-Carrillo
Dance ED Tip #94: Steps for Dance Teachers to Take in the Face of Financial Uncertainty
This past week, coronavirus has shook dance teachers across the country, if not across the world. Everyone is concerned about COVID-19, the pandemic, and what that means for people's health and their livelihood. I know dance teachers and studio owners are all asking themselves, "How am I going to pay my bills?" That is why I asked Sumaya Mulla-Carrillo to share her financial literacy knowledge with the Dance ED Tips community. In this post, she shares with you some practical tips to help you through this tough time. Here they are!
1. Acknowledge how you are feeling.
Seemingly overnight, classes and performances are cancelled or moved online, service industry side gigs are closed, and you are stuck at home tearing your hair out. I want to acknowledge first and foremost, that it’s okay to be scared. It’s okay to be anxious. It’s okay to be sad. The loss of impactful teaching moments is not only a financial hit, but also an emotional one and you can (and should) respect that.
Take a deep breath, tell yourself it’s okay to feel your feelings, and then make a plan for the things you can control.
2. Take stock of where you’re at - your current savings, expected income, and any investments.
Do you have any money saved up? At this time, cash is king. I’m not talking about a literal “stash of cash under the mattress”, but rather liquid money in a savings or checking account that can be easily accessed at any time.
What income can you still expect, and what income will be cut? If you need to get in contact with your employer to find out this information, do it! Your employer should be as communicative and transparent as possible with it’s employees during this time. If you aren’t getting any of that, it’s time to take action and be the person to reach out for answers.
If you have any money invested in the stock market, recognize that the market is a reflection of national fear and uncertainty. If the volatility is making you anxious, stop checking your brokerage accounts and just leave your money where it’s at. The goal with investing during this time is leave your losses alone, until the market regains strength and the value of your investments rises again.
3. Make a Bare Bones Budget - and stick to it.
Get clear about where your money really needs to go. If you are facing a loss in income, now is not the time to impulse shop or stress spend (even though you have all the time in the world to do so)! Your bare bones budget should include your fixed expenses. Rent or mortgage, loan minimums, utility bills, costs for transportation and food, should all be included. Creating this budget can seriously relieve some anxiety and uncertainty. Once you have a plan, all you have to do is follow through!
4. Be proactive. Contact your landlord or mortgage lender, prioritize your bills.
Even if you are able to meet your usual obligations, it never hurts to know your options in the months to come.
If you have a mortgage, you always have the option for forbearance. This is basically when your provider presses pause on your payments due to a financial hardship, but interest continues to accrue. If you are looking at this option, know that it can definitely provide short term relief, but you may end up paying more overall due to interest costs piling up. Still, being proactive and getting in contact with your mortgage servicer is MUCH better than defaulting on a loan because you did not communicate your situation in advance.
If you are a renter, know that several cities are looking to ban evictions during the next month or so due to coronavirus. If you are worried about making rent, it may be worthwhile to reach out to your landlord to see what their policy is. Or to reach out to your local elected officials and pressure them to pass this legislation.
If you will be unable to meet minimum card payments during this time, give your bank a call! Several banks have introduced relief policies to waive late fees, reduce minimums, and provide other forms of assistance. You’ll never know unless you call.
Echoing the above, get in touch with your loan provider to see about their relief policies. Some interest on Federal loans may be waived due to a new federal policy, but this will not lower your monthly payment. Instead, you can expect to see benefits later on, because the majority of your payment goes towards principal balance instead of accrued interest.
If you are somebody who is aggressively paying down debt, right now may be a time to press pause on those extra payments and put that money towards savings instead.
Utilities, Cable and Internet Bills
Several local utility providers have made a commitment to not cut off service to any customers who are unable to make payments in the next 60 days. If you need to cut expenses, this may be an area to start with.
Similarly, companies such as Verizon, AT&T, and Comcast are promising to continue service even if you are unable to make payments. As with anything else, if you are looking to get rid of this expense, try to get in contact with your service provider before cancelling payment.
5. Get creative with your income!
Now may feel like a strange time to start a side hustle, but it’s actually a great time to diversify your income! Creating another way to make money can lessen the blow and set you up for more success in the future.
Offer virtual lessons to your students, or even online private lessons or tutoring. Build other skills like becoming a virtual assistant, social media manager, web designer, private coach, and start building that structure as soon as you can. See if any of your student’s families are in need of childcare during this time, and ask to babysit if you are able to get out and around.
6. Start saving ASAP!
Now is an excellent time to increase your savings. Economic uncertainty means that we are all playing it by ear and the safest way to do that is with a cash reserve backing you up. A recent study found that 40% of Americans are unable to deal with a $400 financial emergency, so if you have little to no savings, know that you are not alone.
I aim for my clients to have an emergency fund of 3-6 months! So take all of the measures listed above - reduce your expenses, see if you can make a little more, and kick all of that extra money into savings. Saving is a muscle, and the more you flex it the stronger it will become. Start small, and see if you can build to a significant amount that will ease your anxiety and become your safety net in times like this.
This guest post is by dancer & financial coach, Sumaya Mulla-Carrillo. She helps artists & freelancers become empowered with their money and build financial sustainability without sacrificing their creative lifestyle.
As a performing artist, she graduated from college believing that she would never make a good living and was destined to be a starving artist. However, as an analytical thinker and someone who refused to be bad at money, she went on a mission to learn as much as possible about personal finances. Over the next two years, while continuing to dance professionally, she built up an emergency fund, saved up enough money to move to New York City, maxed out her retirement investments, and took two international trips.
Sumaya believes that you shouldn’t have to compromise your lifestyle to create arts, that artists are smart and able to take control of their finances, and that freelancers should be planning ahead for their financial futures more than ever.