If you’ve lost your job or had a reduction in income due to the COVID-19 pandemic, you’re definitely not alone. The Federal Reserve Bank estimates that 47 million Americans will lose their jobs due to the economic slowdown caused by the outbreak.
Many people have been laid off or furloughed, which can be devastating. When a person is furloughed, there’s light at the end of the tunnel because they maintain benefits, like health care, and their loss of income is only temporary.
But, whether you’re furloughed or laid off, both situations can lead to an overwhelming financial burden. The average person does not have enough saved in an emergency fund to support their families during tough times like this, so here’s what you can do if you’ve been furloughed or laid off.
While the stimulus checks were helpful, the unfortunate reality is that it barely scratched the surface in terms of helping most Americans’ financial needs.
1. Apply for Unemployment Benefits
You qualify for unemployment benefits if you’ve been furloughed or laid off from your job. The CARES (Coronavirus Aid, Relief, and Economic Security) Act gives states emergency funding so that they can provide weekly payments of $600 until July 13th to workers who’ve temporarily or permanently lost their jobs. Unemployment benefits vary by state and some states may provide unemployment benefits for up to 13 additional weeks.
There’s also good news for people who don’t work traditional 9 to 5 jobs. More and more of us are starting side hustles which sometimes become our full-time hustle, meaning that we work for ourselves. In years past, unemployment benefits were not available to freelancers, self-employed workers, and members of the “gig economy”. However, the CARES Act has permitted funding to gig economy workers.
Each state has their own requirements when determining who qualifies for unemployment benefits, so check with your state’s unemployment office to see if you qualify for benefits.
2. Apply for Rent/Mortgage Relief
Since so many people are experiencing financial hardship right now, some landlords are willing to work out special payment plans with their tenants. If you’re unable to make your rent payments, talk to your landlord and explain that you’ve lost income and negotiate a payment plan for your monthly rent. Despite what you may think, landlords don’t want to evict tenants. Evictions cost landlords time and money, and they have to go through the trouble of finding a new tenant. It is much easier for your landlord to set up a payment plan for you than to find a new tenant, especially during such uncertain times!
If you’re a homeowner, call your lender to learn more about their relief programs. Most lenders are offering temporary relief programs which entail deferred payments and no late fees.
3. Apply for Utility Relief
In some cities and municipalities, utility providers are not allowed to disconnect customers for non-payment. I live in Texas and electricity companies here are not allowed to disconnect electricity service for customers who are receiving unemployment benefits and sign up for a special relief program. Don’t just assume that you’re protected from disconnection though, pick up the phone and call your water, gas, and electricity providers to let them know that you’ve lost wages, ask them to protect your account from disconnection, and ask if you qualify for a deferred payment plan.
4. Put Debt Payments on Hold if Possible
Some credit card companies, like Chase, Bank of America, Discover, Capital One, and American Express, and more are offering special relief programs to people who’ve been laid off or furloughed. Some companies are even extending relief to all customers. Call your creditor, explain that you’re experiencing financial hardship, and ask what your options are for suspending or deferring payments.
If you have student loans, making payments to your education debt should seriously be the least of your worries. Most people don’t pay their student loans anyway, so why start now? Just kidding (not really)! But there is a suspension on federal student loans through September 30, 2020. During this time, the interest rate on federal student loans will be 0%.
5. Perform a Financial Audit
This pandemic has been devastating and no one saw it coming! Like many finance-obsessed people, I am always preaching the importance of having an emergency fund to keep your family afloat when unforeseen situations arise, like global pandemics, illness, job loss, etc. Now may be a good time for you to practice discipline and resist the urge to spend money on non-essentials. You may have to skip your monthly pedicure or spa treatments, and you may have to cook more instead of ordering take-out. Being honest with yourself about your finances can be challenging, but you need to know where you stand financially so that you can map out a plan to get you where you want to be. So, ask yourself:
- How long will unemployment benefits last?
- How many sources of income do I have?
- Do I have a firm budget in place?
- How much do I have saved in an emergency fund? How long will this money last?
- Are there any opportunities for me to make extra money? (food delivery, delivery driving, dog walking, selling on Etsy, etc)
A Word of Encouragement ❤️
Know that you’re not alone. This is a stressful time for everyone. Remember, closed mouths don’t get fed so if you’re having a difficult time, emotionally or financially, reach out and ask for help. You and your family will recover from the hardships brought on by the COVID-19 pandemic and you will be fully prepared for the next economic downturn.
You are strong. You are resilient. You will get through this.
If you need a friend, or someone to vent to, just send me a DM or email. I’m happy to be your shoulder to lean on.