8 steps to take if you lose your job because of coronavirus
These are crazy times that we are living in as the current epidemic is shaking the world. We’ve now seen jobless claims top 30 million over the last six weeks – many of them due to the novel coronavirus. In case you’re keeping track, that’s more layoffs than jobs created since the Great Recession.
Perhaps you’re newly unemployed and asking, “What’s next?”
Most layoffs are temporary to “flatten the curve,” but that consolation may not reduce the initial stress that comes with unemployment. Until the job market regains steam, the CARES Act stimulus package and other steps can help.
There are steps you can take right away to make the best of your situation.
1. Take a Deep Breath and Relax
It’s a natural desire to be productive with your time. Not earning a steady income is financially and mentally stressful. Even if you have the benefit of knowing in advance about a job loss or when you’re getting 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 upfront fears consume your self-confidence. Having a clear mind can make the transition easier. Losing your job is scary, but you can persevere.
2. Apply for Unemployment Benefits
You can apply for weekly unemployment benefits if your employer lays you off or furloughs you. However, you won’t qualify if you quit your job or your boss fires you.
It’s 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 Act relaxing the standard requirements.
Some of the qualifying coronavirus-related reasons to apply for unemployment include:
- Your employer permanently or temporarily lays you off
- Are working reduced hours
- Cannot work due to quarantine or risk of exposure
- Caring for a family member due to the novel coronavirus
- Are self-employed and lost income
The CARES Act temporarily waives the minimum one-week waiting period to apply for 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 on trying until you can file your claim.
Enhanced Federal Unemployment Benefits
Most of the media is focusing on the stimulus check that the CARES Act is providing to many households. This one-time economic income payment is nice but $1,200 ($2,400 for joint taxpayers) only provides limited relief.
In addition to relaxing the qualifications, the CARES Act provides enhanced federal benefits.
Each state is responsible for distributing unemployment insurance. Most states pay a weekly benefit between $200 and $700—enough to buy the bare essentials.
Through July 31, 2020, the CARES Act extends an additional $600 weekly federal benefit. Your state will automatically distribute through the federal Pandemic Unemployment Compensation (PUC) program. This benefit program is for those who file your income taxes with Form W-2.
The self-employed, independent contractors and those with a limited work history will receive the same $600 benefit through the Pandemic Unemployment Assistance (PUA) program. You can receive benefits from this program through December 31, 2020. If you lose your job later in 2020, it’s possible to obtain the enhanced benefits if lawmakers don’t extend the PUC term.
Also, the CARES Act is currently extending the state unemployment benefits an extra 13 weeks. Instead of the standard 26-week benefit window, you can receive unemployment insurance for up to 39 weeks.
3. Simplify Your Finances
Even if you go back to work in a few weeks, this is the perfect moment to simplify your finances. You finally have time to review your spending and saving habits.
“Lifestyle creep” may have a tighter grip on your wallet than you realize.
Look for ways to cut expenses and use your savings to replenish your emergency fund, invest, or pay off debt.
Some easy ways to reduce your spending include:
- Canceling rarely used streaming subscriptions
- Switching to lower-cost plans for your recurring bills
- Cooking meals instead of ordering takeout
- Thinking twice about large purchases
Scheduling automatic transfers from your spending account to a savings account can be another way to prevent overspending. Automation can be a good habit if you usually check your checking account balance to see if you have enough cash to cover a purchase.
4. Keep Tabs on Your Bank Account
Not having a steady paycheck makes it harder to replenish your bank account. Reducing your monthly expenses helps preserve your cash balance, but outflows may exceed inflows.
Make sure you don’t overdraft your accounts and first use your cash for essential expenses. Many banks are suspending overdraft charges and ATM withdrawal expenses and giving you more peace of mind as well.
In addition to watching your account balance, watch out for coronavirus scams as well. Some of the aid programs or charities you interact with maybe phony. They may steal your sensitive information instead of offering help.
You can check your free weekly credit reports until April 2021 at AnnualCreditReport.com—it’s an official US government website. These reports make it easy to spot any unusual activity like new bank accounts, credit cards or loans you didn’t open.
Also, check these reports to make sure your monthly payments or deferred payments accurately report. You don’t need to spend time repairing your credit score during this time.
5. Negotiate Payment Plans for Loans
Even after receiving unemployment insurance and cutting spending, you may need help paying the bills. Many lenders are offering forbearance for monthly installment loans such as mortgages and car loans.
Let’s be clear that loan forbearance is different than loan forgiveness. You will need to repay the loan principal and interest for the months you defer. Lenders might move those payments to the end of the loan. Other lenders may require a “balloon payment” once forbearance ends.
You will need to discuss repayment options with your lender. While forbearance may not be ideal, it’s better than missing payments or defaulting.
Public utilities are also halting service disconnections during this time. You should contact your utility providers and other essential services if you have temporary difficulty making ends meet.
Most Federal Student Loans are in Interest-Free Forbearance through September 2020
Most federal student loans are automatically in administrative forbearance. From March 13, 2020, through September 30, 2020, you do not need to make payments for direct and FFEL loans the US Department of Education services.
The Department of Education is waiving all interest charges during the forbearance period. Any payments you make through September goes entirely to the principal.
6. Spend Time with Your Family
Family time may take a new meaning while living a quarantine life. You may suddenly find yourself spending more time with your loved ones. For instance, you’re not rushing to sports practice or your spouse isn’t staying at work late to meet a deadline.
Eating all three meals with your loved ones and having time to talk can feel strange at first. For instance, one of you isn’t trying to rush to sports practice while the other parent stays late at work.
Instead of trying to create idle chatter to make mealtime pass by sooner, search the internet for conversation starters. You can have plenty of exciting dialogue with your spouse and children.
Each household has different interests, so take time to (perhaps) complete projects as a family or schedule family game nights.
7. Consider Learning a New Skill
The employment landscape is going to be different in some industries than before the pandemic. Sectors like tourism and event planning may take years to recover. Technology advancements will also continue to reshape how we work.
You can use this season to sharpen your skills or learn a new talent. There are many free or affordable online resources you can start using right now.
Maybe you can transition to work from home full-time. Another idea is positioning yourself to accept more responsibility within your current career field. Typically, you couldn’t focus on improving your skills while working full-time.
8. Side Hustle or Volunteer
Losing your job doesn’t require you to be homebound—even when society stays at home. Consider being active in your community if you have the time and energy.
One option is picking up a temporary side hustle for a delivery app. You can make a side income by delivering restaurant orders, groceries or pharmacy prescriptions while maintaining social distance.
Your local community may also have volunteer opportunities. Two ways to find service opportunities are visiting your city website or dialing 211. You might be able to deliver meals to seniors or help understaffed organizations.
Some opportunities don’t require you to leave home. You can also call or text neighbors who may appreciate the conversation to boost their mental health.
This time helping others can also be beneficial to your mental and physical health.
Losing your job is never a pleasant experience. Several safety nets can help you rebound quickly and protect your finances. This respite can be a time for rest and preparing for the future.