Weston: Find free, solid money advice in uncertain times

A HUGE AND GROWING NEED FOR HELP

Nine out of 10 U.S. adults said the coronavirus pandemic had caused them financial stress in an early April survey by the National Endowment for Financial Education. Tens of millions are unemployed, furloughed or struggling with pay cuts, and those numbers are expected to rise. A volatile stock market is hammering retirement funds and other investments.

At the same time, what people need to know about money is changing. Congress has altered tax laws, temporarily banned certain foreclosures and evictions, made it easier to tap retirement funds and rewritten the rules on unemployment. Federal student loan payments have been paused, and many lenders are allowing people to skip payments on other debt.

There are so many moving parts that it’s easy to make a mistake and pay an outsized price.

NOT GETTING GOOD ADVICE CAN BE COSTLY

A reader recently reached out to me after getting what they thought was a coronavirus hardship withdrawal from a former employer’s 401(k). Coronavirus hardship withdrawals, authorized by the Coronavirus Aid, Relief, and Economic Security Act, allow people to take up to $100,000 from their retirement plan balances without having to pay the usual 10% early withdrawal penalty. Income taxes are still owed on withdrawals, but the tax bill can be spread over three years. If you pay the money back, the taxes can be refunded.

What this reader actually got was a regular distribution — in other words, the 401(k) was cashed out. That triggers taxes and potential penalties without the option to spread out the tax bill or pay the money back.

A qualified financial adviser could have helped ensure that the plan offered the hardship withdrawal option (not all do), that the reader was eligible (people must be affected physically or financially by COVID-19) and that the paperwork was properly filled out.

WHAT HELP YOU CAN EXPECT

Consultations typically will be virtual, taking place over the phone or using videoconferencing software. All the financial advisers offering free services can help with topics such as budgeting, unemployment benefits, debt management and making the best use of CARES Act relief checks. Certified financial planners with the FPA, the NAPFA and the XY Planning Network also can advise on more specialized topics, such as the Paycheck Protection Program and other help for small businesses. Credit counselors, meanwhile, work with creditors to arrange debt payoff plans and know about available forbearance programs.

“The options vary considerably depending on the lender you speak to, the type of loan or line of credit that you have and the circumstances that you’re dealing with,” says NFCC spokesman Bruce McClary, adding that a nonprofit credit counseling agency can help people prepare for those conversations with creditors.

Also, you don’t have to be in a financial crisis to ask for a free consultation with an adviser, Wiggins says. If you’re hoping to eventually hire a financial adviser, you want to make sure the person is a fiduciary, which means they are required to put your interests ahead of their own.

“This could be your opportunity to talk with somebody to get prepared for the future,” she says. “We don’t really know what’s going to happen. Let’s make sure we get our finances in order and set up a really good spending plan.”