Ramit Sethi: Here's what to do if you're short on cash right now

With some states seeing spikes in Covid-19 cases and some even shutting down activities again, it's a very difficult time for a lot of people.

Especially if you're one of the tens of millions of Americans who may have lost their job due to the coronavirus pandemic or you're concerned that you may be facing unemployment soon. What do you do if you're short on cash right now?

While the typical advice may tell you to cut back indiscriminately on everything, personal finance coach Ramit Sethi has a different strategy. It does involve some cost-cutting, but also incorporates other steps that can put much-needed money back in your pocket. 

It's called the C.E.O. approach: cut costs, earn more and optimize your spending. Here's how it works.

"Most of us know that there are some things that we spend money on that we can cut back on," Sethi says. While many people may have already cut their monthly expenses, if you haven't, now may be a good time to reevaluate your spending. Sethi suggests starting by picking your two or three biggest discretionary spending areas and focusing on reducing those first. It can be difficult to cut costs everywhere all at once, but having a more targeted approach can make it easier to identify what can be trimmed from the budget and follow through with doing it. 

For some, the biggest (and perhaps simplest) costs to cut first may be streaming services or a monthly beauty sample subscription. These recurring payments can add up, so it's worth keeping track of all the services you currently subscribe to. Decide what's essential and what you can live without, perhaps even just temporarily until you're back on your feet financially. 

If you don't remember exactly what you're signed up for, go through your credit card statement and look for any subscriptions you pay for on a monthly basis. Apps such as Albert and Truebill can also help you identify reoccurring payments. 

Others may find that their food costs really haven't gone down, even during the pandemic. Take a hard look at what you're eating. Are you ordering takeout every night? If so, consider looking into a low-cost meal kit that you can prepare at home, such as Dinnerly or Everyplate. Both offer plans with meals starting at under $5 per plate.

There are also several food blogs, including Budget Bytes and Frugal Nutrition, that provide inexpensive recipes that you can make yourself. Both sites break down the cost of each meal, making it easier to budget.

It may sound odd with so many Americans currently unemployed, but there are still ways to earn money right now, even if you've been laid off because of the pandemic, Sethi says. For some, it may be starting an online business, or perhaps taking on work in an industry that hasn't been as impacted by the coronavirus shutdowns. It's also worth noting that there are several robust federal and state programs currently in place to help Americans get back on their feet financially. 

Starting a business right now probably sounds crazy, but Sethi says it's not as outlandish as it may seem on first glance. Many of his readers are doing just that, with several taking their old jobs online without incurring too many start-up costs. If you used to run a painting class, for example, consider having students pick up the supply kits and do a video class online. If you're bartender, try creating online cocktail classes. And if you're a teacher, perhaps offer online tutoring. "There's a whole movement of people starting businesses virtually right now," Sethi says. 

You don't have to be an entrepreneur to earn some extra cash right now. Many shipping providers, grocery stores, food delivery apps and even retailers are hiring right now. Part-time work could help you bridge the financial gap while you search for a new job in your field or a related industry.

There are even some types of remote full-time jobs such as recruiters, sales account executives, customer service representatives and computer support specialists that are seeing a surge in openings, according to online jobs site ZipRecruiter.  

And don't forget about government programs. If you're a business owner, make sure you're applying for and taking advantage of initiatives like the Paycheck Paycheck Protection Program, which offers forgivable loans to small businesses affected by the pandemic. But you'll need to hurry, the deadline for applications is June 30.  

If you have been laid off or are facing the possibility of being laid off, make sure you're filing for and taking advantage of unemployment benefits, especially since the rules around who is eligible have been relaxed and there's an extra $600 weekly boost in effect through July 30. "It's probably not going to be easy. It's probably going to take more time than you think," Sethi says of the unemployment process. "But that unemployment money is there for you."

Of the three steps in Sethi's strategy, optimizing your spending is the one that a lot of people don't know about, he says. This step is all about making sure you're not overpaying for the essential services you need, such as your cell phone or Internet connection.

There are five types of bills that you probably pay on a regular basis that you should attempt to lower: cell phone, cable, credit card, student loans and housing. Many of these companies, as well as your utility and car insurance provider, may have formal financial assistance programs available at the moment. But even if they don't, it's worth giving these providers a call to try and negotiate down your current payment or delay payment until a later date. 

But before you pick up the phone, do your homework. Research what assistance may be available to you and if there's any information or paperwork you need to gather ahead of time. Plus, take a look at your payment history — if you've had on-time payments for years, that's worth mentioning when you call up these businesses.

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It also might help to do some digging on what other, similar offers are available at the moment. Are there better cable bundles for new customers? Or credit cards with lower introductory APRs or 0% APR periods? The average interest rate is currently 16.61% on credit cards that assess interest, according to the Federal Reserve, so aim to get your rate below that. 

Then pick up the phone. Call these types of businesses and mention that you've been a good customer for years, but the coronavirus pandemic has made it difficult for you to sustain yourself financially. Ask what options your provider has available. 

Not a loyal customer? Turn that into a potential win for the company by saying something along the lines of: "I'd really love for you to earn my loyalty and business today."

"My readers are doing this and they're reporting they're getting their fees cut in half," Sethi says. "They're saving a thousand dollars from a single phone call." 

If you don't have any immediate bills that need to be paid or food you need to buy, any extra money you save should go directly into an emergency fund, Sethi says. 

Remember, it's important to have about three to six months of living expenses saved up for these types of circumstances where you may need some funds to fall back on. 

"Do not allow yourself to get put in a situation where you're down to your last penny," Sethi says. Instead, figure out creative ways of earning more, of cutting back, of optimizing your spending.

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