Stretch Out Your Cash with My 3-D Plan: Ditch, Delay, Decrease

If the Covid-19 crisis has you worried about money – and, honestly, I don’t know anyone (including me) who’s not – you can take some practical steps right now to preserve your cash.

Most of the standard personal financial advice just doesn’t apply right now. All that matters in a time of extreme uncertainty is your cash flow.

More cash means more options. So this is a time to do everything you can to hold on to cash.

The truth is, we don’t know how long the financial impact of Covid-19 will last or how bad things will really get. The money moves I’m talking about are designed to maximize your current cash. They won’t help you get rich over the long run. They won’t help you pay down debt or build a nest egg.

These money moves will help get you through the immediate crisis. And once you’re back on more secure financial footing, you can get back to getting rid of debt and creating wealth.

For now, though, cash is king, and the rest doesn’t matter as much.

The 3 Ds

When you’re trying to hold on to cash, you need to follow the three Ds:

  • Ditch
  • Delay
  • Decrease

Ditch every expense you don’t absolutely need.

Delay any spending that can wait.

Decrease your necessary spending as much as you can.

The more cash you hold on to today, the less cash you’ll be scrounging for tomorrow.

And when all of this is over, if you’re still holding on to a pile of cash, you can use it to catch up on debt payments or retirement savings.

Ditch

Any spending for things you don’t need right now can stop. Ditch any expense that’s draining your cash without providing a clear necessity. Potentially ditchable expenses include things like:

  • Gym memberships that you can’t use now anyway
  • Paid subscriptions
  • Recurring donations (a lovely thing to do, but not at the expense of your own family having food and shelter)
  • One streaming service if you pay for more than one (easier said than done if you have kids with favorite shows on different platforms)
  • Aggressive debt pay down – stick with bare minimum payments

Basically anything you can do without (at least for now), stop paying for – and hold on to that cash.

Delay

Any spending that you can put off – put it off.

If you were planning to replace your hot water heater (that’s still working) or get a new car (and the car you have now works), delay it. Even DIY projects (like mulching your garden)  that will take a bunch of cash can be put off for now.

Retirement savings

Another cash outlay to delay: retirement account contributions.

I know that sounds crazy coming from me. I would never recommend putting these off under normal circumstances. – and these are anything but. Stopping these contributions for now frees up more cash for you. And if your financial situation turns around, you can always catch them up later in the year.

The exception: Keep contributing to your HSA (health savings account) Your HSA lets you stash pre-tax cash to be used for medical expenses. And as long as you use the money for that, you don’t ever have to pay tax on it. You can access this money at any time for almost any kind of medical expense (including insurance premiums) without any taxes or penalties.

Debt

Delayed payments can also apply to mortgage loans, car loans, and student loans right now. Many lenders are offering temporary forbearance – meaning you can skip a few month’s worth of payments – during this crisis.

You will still owe that money, it’s not like a free pass… your payments are just paused for now without the threat of going into collections. Some programs will charge interest, others will pause that too. Check with your lender so you understand fully how this will work for your loan.

Most important: To take advantage of these loan programs, you must contact your lenders and get your request approved BEFORE you stop making payments.

Decrease

Lower every necessary expense that you possibly can. That can mean reducing frequency, like getting takeout 2 or 3 times a week instead of 4 or 5 times. Or it can mean buying less expensive versions of things you use all the time. Other places you might be able to free up some cash include:

Car insurance

Increase the deductibles on your car insurance. If you’re not driving at all, lower or get rid of your collision coverage. You can always add this back and change your deductibles once your financial crisis has passed. Check in with your insurance provider to see how low you can go without losing coverage.

Cell phone

Switch to a cheaper cell phone plan, if you can.  You can find info about the best cheapest cell phone plans here.

Groceries

Check out store circulars (yes, many grocery stores are still running sales) and coupons (check out Coupons.com and other websites) while you’re making your shopping list. Choose generics instead of brand names whenever possible (this can be tricky if you have picky kids). Use cash back and rebate apps like Ibotta, Drop or FetchRewards to earn while you shop.

These temporary money moves can help you stay above water during this unexpected, unusual financial crisis. And that’s the most important thing.

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