Updated on April 10, 2020.
More than 10 million Americans filed for unemployment in March 2020, according to the U.S. Department of Labor. So, if you lost your job due to COVID-19, you are definitely not alone.
Being laid off under any circumstances can leave you reeling, especially if your partner is also jobless—but what does it mean during a pandemic? Can you get unemployment? Will your savings last until your job returns? How long before you can’t pay the rent or buy groceries?
The following tactics will help you draw a clear plan for your finances. If you’re scared of what you might find, it’s all the more reason to do this now—because the reality is you could be in much better shape than you think.
Start with a budget
How much money do you need in a given month? If you don’t have a household budget, then it’s time to do a financial fire drill:
- List your baseline expenses. That’s food, shelter, utilities, insurance premiums (if applicable) and essential debt such as car payments or child support.
- Add up all available monies. That could include unemployment, your partner’s income and any emergency fund savings.
- Subtract the baseline expenses from available funds. With luck, the numbers more or less match. If you’re lucky, you’ll have extra money left over.
To get a truly accurate picture of your cash flow during the COVID-19 crisis, you have to factor in the financial relief measures enacted specifically in response to it. For example, the Coronavirus Aid, Relief, and Economic Security (CARES) Act signed in March 2020 means millions of Americans will be receiving sizeable, one-time stimulus payments and extra unemployment benefits. And depending on your situation, your credit card bills, student loans, mortgages and rent may be deferred for a time.
Here’s a snapshot of what you should consider.
Stimulus payments: The first payments from the government start going out in mid-April; it may take several weeks or months to distribute every payment. If you didn’t file your 2019 taxes, your eligibility will be based on your 2018 filing.
Individuals who made less than $75,000 can expect to receive $1,200. Those who made between $75,000 and $99,000 will receive a smaller payment, depending on their income.
Married couples with a combined income of less than $150,000 will receive a $2,400 payment. Smaller payments will go out to couples who made between $150,000 and $198,000. Parents will also receive a $500 payment for every child under 16.
Unemployment benefits: Under the CARES Act, those who qualify for unemployment insurance benefits will get a $600-per-week federal payment in addition to state benefits. The federal payment will last for four months, and the legislation extends normal unemployment benefits to 39 weeks.
What’s different about COVID-19 unemployment is that self-employed people—including gig economy workers, independent contractors and freelancers—who normally couldn’t get unemployment insurance benefits might now be eligible, according to Stephen A. Woodbury, senior economist with the W.E. Upjohn Institute for Employment Research and professor of economics at Michigan State University in East Lansing, Michigan.
“In the pandemic, self-employed workers who have stopped working have in virtually all cases been laid off in some sense,” says Woodbury. “The work that they did has gone away.”
He suggests applying for unemployment even if you think you aren’t eligible. The payoff is potentially very big: The national average payment of $387 plus the $600 federal contribution is a $987 benefit, total.
Debt relief: Some creditors have made changes in response to COVID-19. For example, many credit card issuers are offering deals to cardholders, such as reduced minimum payments or the option to skip payments without incurring interest charges.
Beverly Blair Harzog, credit expert for U.S. News & World Report, suggests that laid-off workers make minimum payments in order to preserve cash and ask about other options. “Have some bullet points ready so you can share why you’re having problems,” she says. “Credit card issuers have really been trying to help.”
Federal student loans have also been put into “administrative forbearance” through September 30, which means you can temporarily stop paying your loan if you so choose. There’s been a halt to evictions and foreclosures for those with federally backed mortgages, too, including those backed by Fannie Mae, Freddie Mac, the Federal Housing Administration, the U.S. Department of Veterans Affairs and the U.S. Department of Agriculture.
For renters, it’s a bit more complicated. Some cities and states have ordered a halt to evictions, and the CARES Act stipulates a 120-day moratorium on evicting tenants in properties that have government-backed mortgages, starting from March 27. Know the law where you live and talk to your landlord about the best way to handle things going forward.
Finally, banks and credit unions are offering a variety of relief measures, such as deferred home and auto loan payments, forgiven fees and waived penalties for early CD withdrawal. Contact your financial institution to see what programs it’s offering and be sure you understand all the details. For example, you might be able to skip car payments, but finance charges could accrue.
Try a fresh set of eyes
Sometimes creating a budget can feel overwhelming, especially if all you can think about is the money that’s not coming in right now. Getting a fresh set of eyes on your funds can help. The nonprofit National Foundation for Credit Counseling can set you up for a free 1-hour session with a credit counselor, who will help you create “an action plan with options you can use,” according to NFCC spokesman Bruce McClary.
These counselors also have up-to-the-minute information on those creditor programs, he says, which helps you determine how long you can stretch available funds or work out a payment plan with your landlord.
“It’s always easier to negotiate when you have the most information,” McClary says.
Consider a safety net
You may be eligible for additional help making payments or putting food on the table during this time. Visit the Benefits.gov website to investigate your options, including:
- The Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps)
- The Women, Infants and Children supplemental nutrition program (WIC)
- Healthcare coverage
- Utility benefits
For immediate food assistance, Feeding America maintains a state-by-state list of food banks; enter your zip code into their search bar to find one near you.
If you’re a small business owner, investigate loans and debt relief options offered by the U.S. Small Business Administration, which include a $10,000 advance for those who qualify.
