If you find yourself in this unfortunate situation, taking these smart steps right now can make a huge difference. The coronavirus pandemic has left more than three million Americans unemployed as businesses lay off their workforce in massive numbers or have shut completely in the midst of the rapidly evolving virus.
Losing your job is stressful enough even under normal circumstances, but alongside a global pandemic, things become even harder to handle. Meanwhile, you still need money in order to put food on the table, a roof over your head and manage the other financial obligations that everyone has. When this happens, it may feel like everything is out of control, however, there are few steps you can take to manage your finances in order to help you keep your head above water. Additionally, these steps will also help you to mentally recover when you’re laid off.
It’s important to remember that many people are in the same position as you right now and are calling the same banks, lenders and government agencies. You should be prepared for being left on hold for extended periods, but you shouldn’t let that discourage you from getting the relief you need.
Step 1: Apply for unemployment benefits
In most cases, you can file an online request, however, first, you should contact your state’s unemployment office if you need help applying for benefits. For the workers who don’t qualify for unemployment under normal circumstances, like gig workers and people who are self-employed, it now is the opportunity to apply, because they now qualify thanks to the Coronavirus Aid, Relief, and Economic Security Act, which Congress passed on March 27.
Many state unemployment agencies are still awaiting guidance from the Department of Labor on how to implement various pieces of the CARES Act, so they may not be able to process new types of claims allowed under the law right away. Nevertheless, you should continue to check your state’s website and sign up for coronavirus email updates, if offered. Your state unemployment office’s Facebook and Twitter accounts can also be great resources for updates and guidance thankfully it’s just one click away.
The CARES Act also boosts weekly unemployment benefits with an additional $600 per week of Federal Pandemic Unemployment Compensation. You can receive this amount even if you’ve exhausted your state benefits. However, there will be a delay as states are working with the federal government to distribute these funds.
If you’ve already filed a claim which was approved, you don’t need to do anything else to receive these additional benefits. Moreover, keep in mind that the state unemployment offices are currently being overwhelmed by the dramatic rise in claims, so it may take several attempts to file your claim via phone or online. Also, the benefits could be delayed as state agencies try their best to keep up with demand while adjusting to new federal guidance from the CARES Act.
Step 2: Contact your banks and lenders
“Contact any company you pay regularly and see if they can waive or reduce fees for a while,” says Tara Unverzagt, a financial planner and founder of South Bay Financial Partners in California.
This is the time when you need to be proactive and ask for help, proving that you are financially impacted by the coronavirus. Many financial institutions are deferring payments on personal loans, auto loans, home loans, and credit card payments for those who were laid off or are sick and can’t work. If you have a mortgage backed by Fannie Mae and Freddie Mac, for example, you can now suspend your payments for up to 12 months if you’ve lost income because of the COVID-19 outbreak. That covers about half of all home loans in the United States. Additionally, many other banks and lenders are doing the same, although for a shorter time frame (typically 60 to 90 days).
Federal student loan borrowers do not have to struggle with their payments for now, thanks to the CARES Act, which automatically suspends payments on most federal student loans until September 30. More important, borrowers will not be charged interest during this time and do not need to do anything to suspend or restart their payments. If you have a private student loan, all you have t to do is to contact your lender to ask about emergency relief.
Suspending payments is important because it can help you free up cash for the things you can’t delay, like food and possibly rent.
Step 3: Triage your finances
Now it is the time to cut out any unnecessary spendings for the time being. That includes canceling or suspending gym memberships and subscription services, and even paring down your cable package. You can choose free resources to keep you entertained during this period of unemployment and social distancing.
Don’t worry, these cuts are only temporary. The goal here is to free up as much room in your budget as possible for the things that can’t be delayed or put on hold.
Step 4: Tap into community resources
Communities are pulling together to help those hardest hit by the pandemic and now is the perfect time to take advantage of those resources. Most schools are now closed, but there are some districts that are providing free breakfast and lunches for students. Check your local district to see if there is a meal-pickup program.
Other community groups and industry associations are working together to help those in the service, entertainment and hospitality sectors, which have been hit particularly hard by these mandatory closures. Additionally, community kitchens and food pantries in most areas are also stocked and ready to help those in need.
Step 5: Apply for short-term help, if you need it
Some banks and credit unions are offering emergency loans to help cover the gap between the time you’re laid off and when you receive your unemployment checks or when you are able to return to work. These loans are typically for a few thousand dollars, maximum, with no payments for 60 to 90 days.
Step 6: Make a plan for stimulus funds
The two trillion dollar CARES Act stimulus package includes a one-time payment of $1,200 to many Americans, even though the exact amount a person receives will be based on their income. Those payments will likely take a few weeks to arrive, so be patient, help is on the way.