The coronavirus crisis has caused the unemployment rate in the U.S. to reach Depression-era levels. According to the Bureau of Labor Statistics, at the beginning of May, it stood at 14.7 percent. Some analysts predict this figure may balloon up to 20 percent over the coming months, especially as the country grapples with the impact of stay-at-home measures put in place to flatten the pandemic curve.
Since late March, the total number of jobless claims has reached more than 40 million Americans. Initially, the service industry, including travel and restaurant businesses, was the hardest hit. Now, even major startups like Uber, Lyft, and Airbnb have had to let go of staff.
If you’re one of the millions who’ve been laid off, use these resources and money-saving tips to help you through this time.
What Should I Do If I’ve Been Laid Off?
Losing your job is rough, but losing it during a pandemic is even tougher. There are a few steps to take that can immediately help you through this difficult time. Many people are in the same boat as you, so you’re not going through this alone. Be prepared for long wait times when making calls or filing claims, but staying the course and remaining patient will benefit you in the long run.
- Apply for unemployment benefits: You can usually file an unemployment claim online. Some workers who don’t qualify for unemployment under normal circumstances (like gig workers and those who are self-employed) now qualify under the Coronavirus Rescue Act, which Congress passed on March 27, 2020.
- Contact your bank and lenders: Financial advisors suggest taking a proactive approach, reaching out to your banks and any lending agencies you work with to ask for help –– be sure to state that you are financially impacted by COVID-19. Many financial institutions are deferring payments on loans and credit card payments for those who have been affected by the pandemic.
- Talk to your landlord: If you’re concerned you won’t be able to pay your rent on time, get in touch with your landlord as soon as possible. Be upfront about the financial issues you’re experiencing due to COVID-19. Let your landlord know you’re struggling to pay rent and ask for assistance. Many states already have preventative measures in place to ensure tenants can’t be evicted, but it’s in your best interest to keep the lines of communication open.
Employment Resources for Laid-Off Workers
The Department of Labor has compiled a comprehensive list of resources offered by the federal government for people who’ve been impacted by COVID-19. State department websites have assembled information specific to their region that can help, so be sure to visit your local state department’s website for frequently updated information.
CareerOneStop is a one-stop-shop for all you need to know about coronavirus unemployment insurance claims through the Department of Labor.
The 211 network provides help if you need assistance with food, housing, or childcare during the pandemic.
Online recruiters like Indeed and Glassdoor have created lists of useful resources to accompany their job postings. Some bigger companies have been actively growing their workforce at this time. Amazon, Apple, Chipotle, and the Home Depot are just some of the companies that have posted jobs.
How Does the Coronavirus Aid Bill Help Unemployed Workers?
The $2.2 trillion coronavirus rescue package, passed by Congress on March 27, 2020, boosts weekly unemployment benefits. It adds $600 of federal unemployment compensation on top of individual state unemployment benefits per week. You can receive this amount even if you’ve exhausted your state benefits. For the first time, freelancers, gig economy workers, and self-employed workers are also covered by unemployment insurance. The package also increases the unemployment relief period by 13 weeks.
The coronavirus aid bill provides a relief payment of $1,200 to individuals that make $75,000 or less annually and $2,400 to every married couple making $150,000 or less annually. Families and individuals with at least one dependent minor under 17 years-old receive an additional $500 per child. The earning limit is based on your adjusted gross wage. You won’t be eligible for a stimulus check if you make $99,000 per year or more as an individual, or over $198,000 as a married couple.
Money-Saving Tips to Help Weather the Storm
Aside from staying up to date on what federal and state government resources are at your disposal, you should take a close look at how you’re spending your money. More than ever, this is the time to evaluate needs versus wants. Use the tips below to make the money you’ve got last longer.
Reevaluate Your Budget
Even if you already have a budget, being laid off is an excellent reason to revisit it. Sit down with your bank and credit card statements to figure out exactly where you’re spending too much money. One of the first things you can do to save money is to spend less on essential items by using coupons from the Coupon Chief website.
Personal finance expert Rachel Cruze told GMA that she recommends basing your budget on “four walls,” or the four priorities of food, shelter, transportation, and utilities. She also suggests you use your budget to stockpile cash and stop attacking debt for now.
Cut Out Any Non-Essential Spending
You may have to look carefully at your entertainment, luxury, and discretionary spending. Hopefully, your gym hasn’t been charging you during the shutdown, but if you do have a gym membership, it’s advisable to cancel it and opt for home workouts instead.
Another quick way to save money is to stop subscription services and pare down your cable or streaming packages. You don’t have to get rid of all your entertainment options, but you can cut back and pick only one of the many streaming services such as Netflix, Hulu, or Disney Plus. Rely on the library and other free resources to keep you entertained during this period of unemployment and social distancing. You can always go back to these subscriptions when you are back on your feet financially.
Plan Your Visits to the Grocery Store
The pandemic has made overspending at bars and restaurants harder to do, but takeout orders and delivery fees can add up. Consider creating a meal plan so you’ll know in advance what you’re going to get when you go to the grocery store. Try planning your grocery list around whatever you already have in your pantry or freezer and avoid getting caught up in the panic buying hype.
Divert Savings and Defer Loan Payments
Most financial advisors would tell you to save as much money as you can, but if you’re unemployed during a crisis, you may need every last dollar for living expenses. Put a pause on contributions you make to retirement funds, brokerage accounts, 529 plans, and other savings until you’re more financially stable. If you can, make a plan with your creditors and find out if they have any relief options available. If you owe money on a student loan, the coronavirus aid bill helps you defer payments. The U.S. Department of Education’s Federal Student Aid website offers information for student loan borrowers who’ve been impacted by COVID-19.
Evaluate Your Car Insurance Policies
Since many of us are now working from home, many auto insurers are temporarily cutting premiums –– this could result in significant savings. If you haven’t been offered a discount yet, contact your insurance provider to see if one is forthcoming. You may also be able to discuss a cheaper policy with your insurance company because you’re not driving as much to commute to work. If they’re not willing to do that, perhaps it’s time to change your auto insurer.
MoneyGeek’s Vice President of Marketing, Doug Milnes, says: “During this pandemic, keeping expenses down is crucial for so many folks. Auto insurance premiums are often a high-cost item in a family’s monthly budget. MoneyGeek’s auto insurance guides help people understand the cost of insurance in their area and connect them to good-value, low-cost providers who can work with them to find the right coverage at lower costs. Everyone’s situation is unique, so be sure to get quotes from several insurance providers to ensure you’ve gotten the best auto insurance rate and coverage you need.”
MoneyGeek performed an analysis of the cheapest car insurance in all 50 states and found that drivers can save up to 40 percent on auto insurance by comparison shopping..
Consider Refinancing Your Home to Reduce Payments
Mortgage rates are currently at their lowest levels and saving hundreds of dollars a month on your house payment could go a long way to improving your financial situation. Refinancing your home loan with a lower mortgage rate could reduce your monthly payments and the interest you’ll pay over the life of the loan. Before you refinance, work with a broker or use a refinance calculator to make sure the drop in interest rate is enough to offset any closing costs.
Simplify Your Credit Cards
Credit card issuers such as American Express and Capital One are letting customers skip payments without interest in response to the coronavirus pandemic. At the same time, other financial institutions have agreed to waive some of their fees. These companies may also offer hardship programs or other debt management options. Talk to your credit card institutions to see if you can drop down to a lower annual fee. It may mean you lose out on benefits like loyalty programs and reward points, but if it helps decrease your overall costs, it could be worth the loss
Transfer Your Credit Card Balance
Another good way to save money is to look for a credit card with an introductory zero percent annual percentage rate (APR) on balance transfers. The offer may initially sound appealing, but be aware that transfers are rarely free –– you’ll need to do the math and shop for the best balance transfer credit card to see if it works out for you.
Make Sure You Still Have Health Insurance
Now is not the time to go without health insurance. According to a Kaiser Family Foundation report published in early May, nearly 27 million Americans could potentially lose their employer-based health insurance during the coronavirus pandemic. If you’re among the millions who have lost their employer-provided health insurance, you may have one or more options for coverage you can still afford. This will depend on your household income, age, where you live, and where you worked before you were laid off.
You could choose to continue your employer-provided coverage for a short time by paying the full premium (called COBRA continuation). You may become eligible for Medicaid or subsidized coverage through the Affordable Care Act (ACA) marketplaces. Research to make sure you’re not left without coverage during this health crisis.
Don’t Touch Your 401(k)
Although the coronavirus aid bill makes it possible to make withdrawals from your 401(k) without penalties, experts advise against this and suggest it be done only as a very last resort. It may seem like a good move to dip into your retirement savings to cover bills, loan payments, and day-to-day expenses, but make sure you’ve exhausted every other avenue before you go down this road. If you do draw from your 401(k), you could lose the compounding interest of any potential earnings of your hard-earned retirement nest egg.
As businesses begin to open and our economy starts to churn back to life, you may be wondering how and when the return to “normal” will positively impact you and your finances. A lot of people are wondering the same about their own situations. Continue to tap into available resources to help your finances recover from the shutdown, stay the course, and when you must spend money, do so with mindfulness and intention. For more money-saving tips, check out the Coupon Chief blog.