A How To Guide For Surviving Unemployment

Since the coronavirus pandemic began nationwide, the jobless rates started to increase rapidly. Now, the national average unemployment rate jumped up to 4.4% in March. A record 22 million people filed for the program in just four weeks. People are either getting laid off or furloughed. Also, it’s predicted that over 47 MILLION people could lose their positions at work due to the outbreak. This is the reason why so many people have filed for unemployment benefits. There haven’t been that many people that signed up for the program since The Great Depression. Officials haven’t seen such a decline in retail sales since the year 1946.

There has been a huge impact on the economy since COVID-19 first started. Luckily, there are some tips to deal with this new recession. With so many struggling in this horrible economy and with many people that lost their jobs or can’t work, we’re going to provide some helpful tips and advice to navigate this new way of life.

If money is limited right now, you’ll want to work out arrangements with your creditors to pay at least a little each month on a regular basis, if you can. You can only do so much with reduced funds. Now is the time to find out where your household budget stands and how it is affected by this income loss. Make necessary lifestyle changes so that debts do not increase significantly during this vulnerable time.

Tips on How to Survive Job Loss –

Unemployment Benefits:

Some people may be eligible for this insurance. This type of insurance allows the state to send out weekly checks to help keep people afloat. It is described as a temporary income to assist people that just lost their jobs. While on the benefits, it is important to continue to actively seek work. Not everyone is eligible for unemployment. There are guidelines that factor whether or not people can receive the insurance. Anyone that fits the guidelines can apply online or on the phone. After they apply, they will receive a letter in the mail that states if they get the benefits or not.

Stimulus Checks:

Some people qualify for the stimulus checks that the IRS is sending. It may come in the form of a check or through direct deposit. It is a one-time payment of $1,200 to individuals and $2,400 to married couples. Not every person will get the same amount. The amount of the checks being sent out depends on their income. People that are on social security also qualify for an IRS stimulus check. These checks will help millions of Americans stay financially afloat.

Rent and Mortgage:

Luckily during this time, mortgages and rent are halted. This means that people wouldn’t be homeless because they won’t go into foreclosure or be evicted. During the recession in 2008, many people including families were foreclosed or evicted from their homes. Many of them had to live in tent cities or lives with their friends or relatives. It is a good thing that this year during this recession people can still live in their homes.

Gigs and Tasks:

There are many different gigs and tasks to do while staying in quarantine. Working from home or by yourself is what can help many people survive this economy during the COVID-19 pandemic. Although many are jobless, there are small gigs and tasks that people can do in the meantime. Some of the most popular gigs to do during this time include DoorDash, Uber, Lyft, Uber Eats, Postmates, Shipt, Instacart, and more. Some at-home tasks include transcription, virtual assistant positions, freelance writing jobs, and data entry. Amazon and Walmart are also hiring thousands of people to come to work for them. Many people may not get their jobs back, so they might want to consider doing a side gig until they can find another job in their career field.

Cost-Cutting Tips:

The following suggestions will help you make the necessary lifestyle changes to cut back on spending – and avoid accruing more debts – as much as possible during this difficult time.

Shopping –

• When buying groceries, prepare a list, shop less often, and avoid convenience stores. Convenience is costly. Comparison shop and buy store brands instead of name brands. Before you checkout, put back 5-10 percent of the things in your cart, especially junk foods and prepared foods.
• Avoid one-stop shopping places, if you can. Do not browse for entertainment or an escape. It is too easy to spend money. Shopping should be for essential items only.
• Shop re-sale shops for children’s clothes, toys, adult everyday clothes and home items. Remember, even if an item is on sale it is not a savings if you don’t need it.

Economize At Home –

• Turn off lights and TV when not in use, run the dishwasher and washing machine only with full loads. Set the thermostat at 66 degrees. Recycle useful items for your own use.
• Contact utility companies for information about energy assistance programs.
• Entertainment adds up quickly: movies, video rentals, cable TV, hobbies, toys, and reading materials. Put a clamp on as much as possible during this time and look for free activities.
• Ask your doctor about generic equivalents for your prescriptions. Comparison shop among pharmacies to find the best price.
• Cut down on expensive gift giving.

Unemployment Pitfalls:

As time passes, you may be tempted to succumb to the following pitfalls of unemployment. Be aware of them and exercise caution:

• Using credit to supplement income can be a real temptation. Credit does not equal income. Borrowing for expenses or payments can be dangerous. You can dig yourself a deeper hole that will take years to climb out of.
• There is a tendency to want to protect children from the pain of doing without to shield them from your unemployment situation. This is a mistake. Let them get involved. It’s a family problem, requiring family cooperation and family solutions. Young adults can obtain part-time jobs. Younger members can afford to hear the word NO to their requests. The shared experience will be an excellent way to teach children coping skills and will strengthen family ties.
• You may think this is a perfect time for home decorating or repairs you never had time for when you were working. Think again. Remember, only your labor is free, and home improvement costs add up quickly.
• Don’t cash in pension, IRA, or 401K funds to meet expenses. There may be a tax penalty for early withdrawal. The total amount also is taxable in the year in which it is withdrawn. Using the funds now will take a substantial bite out of your future security.

Debt Reduction Tips:

Consider the following debt management tips when looking to reduce debt and gain control of your finances:

• Pay high interest rate credit cards first. Organize your credit cards from highest interest rate to lowest interest rate. While continuing to pay all of your creditors, put as much extra money on the one with the highest interest rate. Once you pay off the card, add that payment amount as an extra payment toward the card with the second highest interest rate.
• A consolidation loan at a lower interest rate may help you get out of debt faster and manage your debts. Remember to cut up the credit cards so you aren’t tempted to run up the balances again.
• Negotiate with your creditors. Contact your creditors and ask for lower interest rates on your credit cards. If they value you as a customer, they may lower your interest rates to keep you as a customer.
• Transfer higher interest rate credit cards to one with a lower rate. Make sure the lower interest rate applies to balance transfers, and watch for fees.
• Set a budget and stick to it. Create a spending plan that allows you to reduce your debts.
• Review your expenses and identify overspending. See where you can cut back and eliminate unnecessary expenditures.
• Use your savings and other assets to pay down debts. Withdrawing savings from low interest accounts to settle high rate loans usually makes sense. Don’t completely deplete your savings account. Seek professional advice before liquidating assets.
• Seek help! Advantage Credit Counseling Service has debt counseling services to help families develop workable monthly budgets. If appropriate, we will suggest our Debt Management Program. Under this plan, creditors offer special incentives to clients who make a commitment to get out of debt. Incentives include waiving late fees and over-the-limit fees and lowering interest rates.

Conclusion –

The best way to survive job loss during the COVID-19 pandemic is to complete small tasks or do gigs online, deliver food or groceries for extra income to keep afloat, apply for unemployment benefits, and track the stimulus check that will help millions of Americans nationwide. Many don’t have to worry about the rent or mortgage, but doing these things will help anyone push through this global recession.

Worrying about money is just one of the many stresses involved in losing a job – but it is a major one. You’ll want to halt all unnecessary spending. Go into ‘crisis mode’ and get real conservative with your spending. Finding new employment may take longer than you expect, and you’ll need to deal with debt obligations you assumed before your income was lost. There are plenty of ways to make money online, so this should be a top priority. We’re all in this together! If you need any help or assistance, please reach out to us and speak to one of our certified credit counselors.