As some businesses close their doors and people are staying home due to the Coronavirus (COVID-19), Americans are finding themselves out of work, either temporarily or due to company layoffs or furloughs. If you find yourself in this situation, you may have concerns about paying upcoming expenses.
Use these tips to navigate through this time and determine next steps.
Step 1: Take a step back and breathe. It’s easy to get caught up in the fear of the unknown during situations like this. The best thing to do is acknowledge how you’re feeling – these feelings are normal. This situation is temporary, and things will get better.
Step 2: Consider applying for unemployment. Contact your state’s unemployment office and file your claim online or over the phone. Once your unemployment claim is received, it could take several weeks to process, so it’s important to file promptly.1
Step 3: Evaluate your savings. What does your savings look like? Based on your expenses and cost of living, how long do you think it will last? If you don’t think you have enough, you may want to consider hardship or personal loans to help bridge the gap. You could also pick up a temporary job, but keep in mind, this will make you ineligible for unemployment if you do so. If possible, try to avoid dipping into your retirement savings.
Step 4: Cut down on your spending. Look for places in your budget where you can cut down on expenses. Consider getting rid of the non-essentials, such as: gym memberships, music streaming services, or even mobile app monthly fees. It might be difficult to part with some of these things, but your budget will thank you for it. As your situation changes, you can always revisit these services to determine if you still want to use them.
Step 5: Make financial obligations the priority and ask your lenders for help if needed. If you find you need to prioritize some of your expenses, it’s best to attend to necessities, such as: rent/mortgage, electric and gas bills, and food. Then focus on your other debts, such as your vehicle loans or credit card payments. If you’re concerned about these payments, many lenders and financial institutions are providing financial hardship assistance and programs to help through this time; just reach out and ask. They may be able to extend your due date, waive late fees, or offer a different payback plan option.2
Step 6: Re-evaluate your student loan payback plan. In these types of situations, you may be able to adjust your repayment plan by temporarily suspending or lowering your payments. If you wish to suspend payments, the two most common ways are through deferment or forbearance. If you’re just looking for a lower payment, you may consider a refinance.3 The best thing to do is talk to your lender about your current financial situation so they can help determine the best options.
Step 7: Determine your healthcare plan. Your options for healthcare depend on how you were let go of your job – through a company furlough, layoff, or otherwise. If you were furloughed, you should talk with your employer. Some companies are covering healthcare expenses during the length of the temporary leave of absence. If you were laid off or terminated, healthcare is likely no longer provided by your employer; however, you may be eligible for a COBRA plan.4 If you decide not to go that route, you’ll need to look for alternatives for healthcare coverage.
The best thing you can do in times like these is take proactive steps to reduce the impact. To help minimize any monetary consequences of losing your job, make sure you have access to healthcare, revisit your budget, and seek COVID-19 assistance programs right away to reduce any long-term unemployment impact.
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1 USA.gov Unemployment Help
2 Federal Trade Commission Coping with Debt
3 Money Under 30 How to Handle Student Loans After Losing Your Job
4 The Balance Careers Consolidated Omnibus Budget Reconciliation Act