Here are the steps you should take if you lose your job.
These are crazy times we live in while the current epidemic is shaking the world. We have seen unemployment benefit claims in the top 30 million in the past six weeks, many of them due to the new coronavirus. In the event that you keep track, it involves more layoffs than jobs created after the Great Recession.
Maybe you're a new unemployed person and ask, "What's next?"
Most layoffs are temporary to "flatten the curve", but that consolation may not reduce the initial stress resulting from unemployment. As long as the job market does not regain momentum, the CARES Act incentive package and other steps can help.
There are steps you can take right away to make the most of your situation.
1. Take a deep breath and relax
It is a natural desire to be productive with your time. Not earning a steady income is financially and mentally stressful. Even if you have the advantage of knowing ahead of time about a job loss or when you will be called back, the "big day" is full of uncertainty.
To quote Charles Dickens from A Tale of Two Cities, "It was the best of times and the worst of times."
Don't let your initial fears consume your self-esteem. Having a clear mind can facilitate the transition. Losing your job is scary, but you can persevere.
2. Apply for unemployment benefits
You can claim weekly unemployment benefits if your employer fires you or gives you a hand. However, you won't qualify if you quit your job or your boss fires you.
It is currently easier to qualify for unemployment insurance because of coronavirus measures. People who may not be eligible for benefits under normal conditions can receive aid thanks to the CARES law which reduces the standard requirements.
Some of the qualifying reasons related to coronavirus to claim unemployment include:
Your employer fires you permanently or temporarily
Reduced hours are working
Cannot work due to quarantine or exposure risk
Caring for a family member because of the coronavirus novel
They are self-employed and have lost their income
The CARES law temporarily waives the minimum waiting period of one week to request benefits. Anyone can apply as soon as they lose their job.
You will need to apply for unemployment insurance directly through your state's unemployment website. Many state unemployment websites are crashing because there are so many unemployment claims. Keep trying until you can submit the request.
Federal unemployment benefits improved
Most of the media are focusing on controlling the stimulus that the CARES law provides to many families. This one-time payment for economic income is pleasant, but $ 1,200 ($ 2,400 for common taxpayers) only provides limited help.
In addition to relaxing qualifications, the CARES law offers greater federal benefits.
Each state is responsible for the distribution of unemployment insurance. Most states pay a weekly allowance of between $ 200 and $ 700, enough to purchase bare essentials.
Until July 31, 2020, the CARES law extends an additional weekly federal benefit of $ 600. Your state will automatically distribute itself through the federal Pandemic Unemployment Compensation (PUC) program. This benefit program is intended for those who submit income tax with the W-2 form.
Self-employed, self-employed and those with limited employment history will receive the same $ 600 benefit through the Pandemic Unemployment Assistance (PUA) program. You can receive benefits from this program until December 31, 2020. If you lose your job later in 2020, you can get the biggest benefits if lawmakers don't extend the term PUC.
In addition, the CARES law is currently extending the state's unemployment benefits by an additional 13 weeks. Instead of the standard 26-week bonus window, you can receive unemployment insurance for up to 39 weeks.
3. Simplify your finances
Even if you come back to work in a few weeks, this is the perfect time to simplify your finances. Finally you have time to review your spending and your saving habits.
Lifestyle can have a tighter grip on the wallet than you think.
Look for ways to cut down on expenses and use your savings to replenish your emergency fund, invest or pay off debt.
Some simple ways to reduce your expenses include:
Canceling rarely used streaming subscriptions
Switch to low cost plans for recurring invoices
Cook meals instead of ordering takeaways
Thinking twice about big purchases
Scheduling automatic transfers from your expense account to a savings account can be another way to avoid overspending. Automation can be a good habit if you usually check your current account balance to see if you have enough money to cover a purchase.
4. Keep an eye on your bank account
Not having a steady salary makes it more difficult to fill up your bank account. Lowering your monthly expenses helps keep your cash balance, but outflows can outweigh your inflows.
Make sure you don't overdraft your accounts and use cash for essential expenses first. Many banks suspend overdraft fees and ATM withdrawal fees and also offer more peace of mind.
In addition to checking your account balance, also beware of coronavirus scams. Some of the help or charity programs you interact with may be fake. They could steal your sensitive information instead of offering help.
You can check the free weekly credit reports until April 2021 on AnnualCreditReport.com, it is an official website of the United States government. These reports make it easy to locate unusual activities such as new bank accounts, credit cards or loans that you have not opened.
Also, check these reports to make sure that monthly payments or deferred payments report accurately. It is not necessary to waste time repairing your credit score during this period.
5. Negotiate payment plans for loans
Even after receiving unemployment insurance and cutting spending, you may need help paying bills. Many lenders offer tolerance for monthly installment loans such as mortgages and auto loans.
Let's be clear that loan tolerance is different from loan forgiveness. You will need to repay the loan principal and interest for the months you postpone. Lenders could move these payments to the end of the loan. Other lenders may request a "hot air ballooning payment" at the end of the tolerance.
You will need to discuss the repayment options with your lender. Although tolerance may not be ideal, it is better than missing payments or default.
Public services are also stopping service disconnections during this period. You should contact your service providers and other essential services if you have temporary difficulties in making ends meet.
Most federal student loans have an interest-free tolerance until September 2020
Most federal student loans are automatically in administrative tolerance. From March 13, 2020, until September 30, 2020, there is no need to make payments for direct loans and FFELs to the U.S. Department of Education services.
The Department of Education waives any interest charges during the grace period. All payments made up to September go entirely to the principal.
6. Spend time with your family
Family time can take on a new meaning while living in quarantine. You may suddenly find yourself spending more time with your loved ones. For example, you are not rushing to play sports or your spouse is not late for work to meet a deadline.
Eating all three meals with your loved ones and having time to talk can seem strange in the beginning. For example, one of you is not trying to hurry to play sports while the other parent is late for work.
Instead of trying to create idle chatter to get your meals through first, search the Internet for conversation starters. You can have many exciting dialogues with your spouse and children.
Each family has different interests, so take some time (perhaps) to complete projects as a family or schedule family game nights.
7. Consider learning a new skill
The employment landscape will be different in some sectors than before the pandemic. Sectors such as tourism and event planning may take years to recover. Advances in technology will also continue to reshape the way we work.
You can use this season to hone your skills or learn a new talent. There are many free or convenient online resources that you can start using right now.
Maybe you can switch to work from home full time. Another idea is to position yourself to accept more responsibilities in your current career field. Generally, you cannot focus on improving your skills while working full time.
8. Side Hustle or Volunteer
Losing your job doesn't require you to be forced home, even when the company stays at home. Consider being active in your community if you have time and energy.
One option is to pick up a temporary side hustle and bustle for a delivery app. Secondary income can be obtained by delivering restaurant orders, groceries or pharmaceutical prescriptions while maintaining social distance.
Your local community may also have volunteering opportunities. Two ways to find service opportunities are to visit your city website or dial 211. You may be able to deliver meals to seniors or help short-staffed organizations.
Some opportunities don't require you to leave the house. You can also call or send messages to neighbors who might appreciate the conversation to improve their mental health.
Helping others this time can also help your mental and physical health.
Losing your job is never a pleasant experience. Different safety nets can help you bounce quickly and protect your finances. This truce can be a moment of rest and preparation for the future.