Extra Utility Assistance Available to Iowans affected by COVID

Iowans who have experienced a COVID-related income loss any time since March 17, 2020 may be eligible for extra assistance with utility bills including electric, natural gas and water bills if they are at risk of disconnection. Many households whose incomes are above the regular guidelines for energy assistance may qualify for this help.

The Residential Utility Disruption Prevention Program went into effect about a week ago, with an application deadline of November 20, 2020.

Applicants must meet income guidelines (80% of median income, which is more generous than regular utility assistance), and must already have an unpaid utility bill. More eligibility details, as well as required documentation, are found at the program’s website.

You must apply on-line; if internet access is a problem, families are encouraged to get help from a trusted friend. A local Community Action Agency may also be able to help.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Managing Winter Heating Costs During the Pandemic

When prioritizing expenses, a major household bill is utilities (e.g., electricity, gas, water and sewer, landline and cell phone, and internet/cable). The highest utility cost is typically heating the home.

Plan for increasing home heating costs over the next six months. COVID-19 may increase these costs because many families are spending more time working and/or learning from home.

Average Iowa household utility expense of $2,580 varies widely according to the size of a home, climate, and utility usage patterns. Regardless of what you pay for utilities, there are ways to pay less. 

Step 1: Check Eligibility and Request Energy Assistance. The Low-Income Home Energy Assistance Program (LIHEAP) assists households with a portion of the home heating bills, particularly those facing disconnection or who have trouble paying their utility bill. Early applications for LIHEAP started October 1 (for elderly and disabled applicants), with November 1-April 30 as the annual application timeframe through a local community action agency.

A general overview of the LIHEAP program is available in multiple languages.  Information on where to apply, through your local Community Action Agency, is found on the Iowa Department of Human Rights website. It is generally necessary to call ahead for an appointment.

Step 2: Ask for A Winter Moratorium. You may avoid a utility shut-off during the “winter moratorium” if you apply for and qualify for the Low-Income Home Energy Assistance Program (LIHEAP).

  • If you are certified eligible for LIHEAP, utilities cannot shut off your gas or electric services from November 1 through April 1.
  • You should try to pay as much as you can on your utility bills, even though you cannot be shut off, because the bills will come due in April. If you have made a good faith effort to pay throughout the winter, the utility company is more likely to work with you on a payment arrangement.

It is always best to keep making payments to the maximum extent possible during any period when your utility provider is prohibited from disconnecting your service. Making payments during the winter moratorium creates “good will” with the utility company (with whom you may be negotiating a payment plan) and also keeps the problem from getting worse.

Step 3: Manage Utility Bills

-Know How Much to Expect:  Ask your utility provider for how much the utility bill was last year for your home or apartment. Electric and Natural Gas average monthly costs start at $215 and go higher depending on the size of your home and weather conditions. Pay as much as you can afford monthly.

-Weatherize: Leaky or old windows can account for 10%-25% of heating costs due to warm air escaping. Replace windows with double-pane windows or installing storm windows. Get help from the Iowa Weatherization Assistance Program https://humanrights.iowa.gov/dcaa/weatherization

-Lower the Thermostat- Dial down the thermostat saves energy in the winter by setting the thermostat to 68°F while you’re awake and setting it lower while you’re asleep or away from home. Even one degree lower can make a difference.  Industry figures for every degree you turn down your thermostat (and leave it for 8 hours) you save between 1 and 3 percent of your heating bill.

To provide help in making decisions about bills and expenses, free financial consultations are available to all Iowa residents through ISU Extension and Outreach’s Human Sciences Specialists in Family Finance. We can help revise budgets, prioritize spending and link you to community resources. Find your local contact at our webpage or by contacting your County Extension Office.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Rethinking Your Retirement During COVID-19

I have several acquaintances who are retiring early because of the pandemic. You probably do, too. Retirement plans are just one more thing that have been thrown into flux due to COVID-19.

Some employers are offering early retirement incentives. Many Iowans are considering early retirement due to job challenges, health concerns, or other reasons. On top of that, temporary policy changes have made it easier for people to withdraw from their retirement accounts during 2020. You may have questions as you sort through your options.

A new 45-minute on-line workshop “Rethinking Your Retirement During COVID-19” from Iowa State University Extension and Outreach is designed to equip you to make informed retirement decisions during this turbulent time.  

The free workshop is available at noon or 5 p.m. on both Tuesday September 29 and Thursday October 1, with more dates likely through the fall. Pre-registration is required. You’ll find the registration links at ISU Extension’s retirement resource page — scroll under the “Upcoming Events” section to find the session you wish to attend!

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Prioritizing Bills

What’s unique about the COVID-19 experience is the financial stress we’re also experiencing at the same time. My colleagues and I (all ISU Extension financial educators) are listening and learning from people facing financial challenges who contact us for unbiased information and ideas.

 “When the crisis hit, I was glad I knew how to pay attention to the most important bills. Obviously rent and groceries were our priority.”

What expenses should I pay in a time of crisis? Step One is to Separate your essential and non-essential expenses. Prioritize bills to keep you safe, help you survive and stay employed— they include: Food, medicine, rent or mortgage payments and utilities. Iowa Legal Aid recommends paying water and energy bills in full to avoid accumulating debt and facing potential utility service disconnection.

The second step is figuring out how much cash you must have to pay the essentials.  You’re responsible for paying all your expenses on time. When we don’t have enough to cover our needs consider building a short-term plan. This plan may involve paying some bills late and needs to consider the consequences of failing to pay certain bills.

Feeling more in control will be worth the time it takes to plan. Research shows that taking these steps builds financial confidence and reduces anxiety.

Establish a short-term plan and reduce the financial stress during these tough times by contacting an ISU Extension Family Finance Specialist near you to talk through ideas and find a place to start. You can also connect with your local educator by calling Iowa Concern 800-447-1985.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Unemployment and Taxes

Did you know unemployment benefits count as taxable income? If you (or someone you know) have received unemployment income during this year when so many people have experienced job loss, here is the bigger question: Did you have taxes withheld from the payments?

If you are currently receiving unemployment income, now is a good time to check and see if federal and state income taxes are being withheld; if they are not, you should be able to change that going forward. Why does it matter? Next winter when you file your 2020 tax return, you will find out how much tax you owe on your 2020 income. If you didn’t have enough withheld from your paychecks, then you may need to pay in by April 15. It’s possible that the amount you need to pay in could be $1,000, $2,000 or even more. In addition, you may owe penalty for not having enough withheld, and/or a penalty for late payment if you cannot pay the bill in full by April 15.

What can you do now? If you received unemployment income and did NOT have taxes withheld, I would encourage you to go to the IRS Tax Withholding Estimator, and enter information about all your income for the year, along with the information it asks for about family size and other tax-related issues. Don’t worry; this is anonymous – it’s just a calculator for your own benefit. Based on the results of your calculations, you should have a pretty good idea of what to expect. If it looks like you will owe taxes, you can start saving now, or even send in one or two quarterly estimated payments using IRS form 1040 ES. Checking in with your tax preparer might also be a good idea.

The IRS recently issued a poster alerting people to take action and avoid the unpleasant surprise of a big tax bill. If you can, please consider posting it on social media or posting printed copies at your place of work, or house of worship, or at local businesses, to help others plan ahead.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Have You Received Your $1200 EIP? We can help!

For many of us, the $1200 Economic Impact Payment (EIP) authorized by the CARES Act is old news; I, for example, received my payment in early May. But if you have not received the payment, it is not too late! There are steps you can take to claim the payment! Take these steps by October 15 to avoid further delay.

A first step is to find out if you are eligible. Most adults are eligible if they have a social security number, are not claimed as a dependent on someone else’s tax return and have income below the (generous) income guidelines. Even people who do not need to file a tax return are eligible. This includes people whose main income source is Social Security, or a non-taxable income such as SSI or VA benefits. If you have friends or family members who should receive the payment, help them out by sharing this information!

The Internal Revenue Service (IRS) manages the EIP program and maintains a webpage to assist us and keep us informed. They offer two tools. The first is called “Get My Payment.” At this secure IRS site, users enter their social security number, date of birth, and address. Note as long as you are at the real IRS site, you can feel safe entering that information. If you file taxes jointly with a spouse, we suggest you enter the information about the spouse who is listed first on the tax return. The second IRS tool is the “Non-Filers Tool,” designed for those who do not need to file a tax return.

If you use one of the IRS tools but are unclear about what the tool tells you, we can help! ISU Extension and Outreach Human Sciences Specialists in family finance are equipped to help Iowans trouble-shoot the process. Please contact us if you need assistance!

For many people, the first step in claiming the payment is to file their 2019 tax return. Yes, the deadline is past, but you can still file anyway. In many cases, my co-workers and I can connect you with a way to file your tax return for free.

Final Note: it is our understanding that filing a 2020 tax return (starting in February of 2021) will provide one last chance to claim the EIP, and will be used to verify that households received the correct EIP amount. However, we do not yet know how that will work. And why delay?! Take action now to claim this valuable benefit!

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Income loss, Covid-19 and protecting your credit score

If Covid-19 has caused you a loss of income, you’re facing questions: What can I do if I can’t afford all my bills? How will this affect my credit score going forward?

The first thing you need to do is develop a new budget. Any time income or expenses change, a new budget (spending plan) is needed. This plan can save time and reduce stress because it helps you look at your financial picture for the whole month all at once, rather than just dealing with each expense as it comes along. Having a well-thought-out plan can make the difference between falling behind on bills and being able to make your payments on time.

A good next step is to contact your lenders — the holders of any loans or credit cards you may have. Ask if you are eligible for any type of assistance. Many financial institutions/creditors are willing to work with consumers due to the current pandemic. You may be able to work out a modified repayment schedule with payment amounts that fit your reduced budget. 

There are various ways that creditors or lenders can help consumers. They may waive late fees, offer payment modification, or even make a new short-term loan. Payment modification may be via reduced payments, interest-only payments, or possibly forbearance (which means making no payments for a period). Remember, accounts in forbearance may be reported to credit bureaus as late or missed payments.

Finally, it is important to review your credit report. You can obtain a free copy from www.annualcreditreport.com. Normally credit reports are available free once a year, but due to COVID, they are available weekly until. Checking your credit report allows you to correct any errors your find, which may boost your score, and certainly ensures your credit is reported accurately and reduces fraud risk. Those corrections may also help with job searches, rental inquires and lower interest rates.

You may also choose to add a consumer statement to your credit reports. Although it will probably not boost your score, it offers you a chance to explain why you were having difficulty paying bills on time like normal. This explanation could make a difference to future employers or lenders that review your credit report. This statement should be brief (100-200 characters).

Today’s guest blogger is Casey Codner, Extension Human Sciences Specialist in Family Finance serving east central Iowa

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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The CARES Act and Student Loans

As noted in our post last spring, the CARES Act provides some relief for those repaying student loans. According to the Federal Reserve, the average monthly student loan payment ranges from $200 to $300 and in 2010, the total of student loan debt surpassed auto loan debt and credit card debt. Clearly, student loan debt affects many families, and the automatic suspension of principal and interest payments on qualifying student loans through September 30, 2020, as provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, has been a boon for those whose loans qualified.

If you are financially able to make payments on your student loans, however, it would save you money in the long run. Any payments you make between March 13 and September 30 will be applied directly to principal! This will help you pay off your loans faster and reduce interest cost.

If you are hoping to benefit from a student loan forgiveness program (such as those that might be offered in exchange for teaching or practicing medicine in under-served areas), there is more good news. The suspended payments count towards any student loan forgiveness program, as long as all other requirements of the loan forgiveness program are met.

If you wish to check on details of your student loan debt, you can check your information on the National Student Loan Data System at https://nsldsfap.ed.gov/nslds_SA/. Through this website, you will be able to review your Financial Aid information including, federal loans, grants, and current student loan status. You can find additional information about student loan repayment options on the Consumer Financial Protection Bureau website .

Keep in mind that as it stands now, suspended payments must resume beginning October 1, so start planning accordingly. You can find additional information about student loan repayment options on the Consumer Financial Protection Bureau website . In addition, any updates from the federal government will likely be posted at studentaid.gov/announcements-events/coronavirus.

Mary Weinand

Today’s guest blogger is Mary Weinand, ISU Extension and Outreach Human Sciences Specialist in family finance, who serves southeast Iowa.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Public Health Scam

One of our colleagues received this message from the county public health office where she works. If it could happen in one county, it could happen anywhere… as always, be skeptical of unsolicited calls or emails, especially when they request payment!

The email read:

A local bank just made me aware of a scam going around regarding Public Health. Someone is calling people saying they are with the local Public Health office and telling that person they have been exposed to a positive case. The caller then says the office wants to send a COVID-19 test kit and all they need is a $50 processing fee. Public Health will NEVER ask for your banking or credit card information and we wouldn’t be charging for a COVID test to be done.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Prepaid Card? Doesn’t replace bank account

Banking is something many of us take for granted, so it may surprise you to learn that a noticeable share of American adults (perhaps ten percent) are UN-banked — meaning they don’t have any connection to a bank or credit union.

Some people are satisfied without bank accounts, using prepaid cards to: receive direct deposit from wages or tax refunds; pay bills; and make retail purchases. Of course, there are fees for prepaid cards: users can compare and choose the card with the best fee structure for the way they will use the card.

Prepaid card users may decide a few fees are worth it to avoid the “hassle” of bank account management. But credit union or bank accounts offer important advantages:

  • Strengthen credit scores. Using prepaid cards does not contribute to your credit history, while a solid banking relationship does. That may be especially important currently, when other aspects of credit history may be “fuzzy.” A recent Wall Street Journal article points out that because many lenders and businesses have offered easy terms for deferring payments during the COVID emergency, a credit report may fail to show the full picture of a prospective borrower’s financial stability. With that in mind, some lenders may rely more heavily on banking information when evaluating credit risk.
  • Safety. Bank accounts, debit cards, and credit cards all offer substantial legal protections to the owners when the account or card is lost, stolen or misused through fraud. Prepaid cards offer little or no protection.
  • Stability. I recently tried to assist a woman who knew she had received her $1200 economic impact payment; it had been deposited to the same prepaid card she had used to receive her 2018 tax refund. BUT she didn’t have the card anymore, and she didn’t even know what company had issued it. She was unable to make use of that valuable benefit. Based on the information from that 2018 return, I was able to help her search for the bank and find a phone number to call. I don’t know what happened after that. I hope she was able to get a replacement card somehow, but I imagine that she had to jump through some hoops (including proving her identity) before she was able to do so. A stable banking relationship makes life easier in many ways.

If someone you know is going through life unbanked, you might suggest they reconsider. Being “banked” has distinct advantages. If they face obstacles to obtaining an account, it might be worthwhile to contact a local bank or credit union for guidance. Some financial institutions offer programs that help people again qualify to open accounts.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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