Last week I shared some ideas our family is using to cut our budget during this economic crisis. This week, let’s address loss of job or self-employment income as a result of the COVID-19-induced economic downturn, and how you should think about money management in a crisis. Here is a checklist of steps to take or resources to investigate if you are in dire straits financially. This information presumes you live in the United States, but likely other countries have analogous programs.
When a crisis hits, it is easy to freeze and not know where to start to remedy your situation. It is ideal for you to be as proactive and focused as you can be in this time of stress. Sitting still and hoping things will work out is not a plan that is destined for success. Instead, evaluate your situation and then make a plan. The following list of items will get you started.
Check your benefits
Does your employer offer any job placement services? And what about your health insurance? Get as much information as you can about benefits that might help you immediately, as well as premium cost information for transitioning your health insurance to COBRA.
Apply for unemployment. . . But be sure to wear your patience pants
The waits are long, and the unemployment system is frustrating. Instead of getting angry and upset, expect long waits and the possibility that it might take days or weeks to get your claim filed. Have your beverage of choice handy, as well as something to do while you wait.
After you file for your state’s benefit, don’t forget to apply for the Federal unemployment benefits now offered under the CARES Act.
If eligible, apply for the Supplemental Nutrition Assistance Program (SNAP)
Check out eligibility requirements and program details here.
Check out non-profit debt counseling
Your local community might have a non-profit agency that provides debt and money management assistance. If you cannot find one, check out this site for resources. If you reside in the western counties of North Carolina, go see the folks at OnTrack Financial Education and Counseling. They are compiling excellent resources for the COVID-19 crisis. You might have a look even if you aren’t a North Carolina resident.
I cannot say this enough – if you need assistance with paying your debts, seek a non-profit agency to help, not a paid service. If you are considering a paid service, vet it out with the National Foundation for Credit Counseling at the first link in the prior paragraph.
Determine if you are eligible for mortgage or rent relief
If you are a renter, ask your landlord about the option to pay less or forego rent payments for a month or two. Be very careful here and get everything in writing.
If you are a homeowner with a mortgage, reach out to your lender to see what options you might have.
Clarify student loan relief
Be careful here, too! Federal student loans have payment forgiveness through September. Be sure to check – do not assume you have a Federal student loan and just stop making payments. Call the lender via the phone number on your statements and clarify what options you have.
Talk to lenders about other debt relief
If you have other debts, such as credit card debt, reach out to your lender and inquire about options. Many, many banks and other lenders are being proactive and offering relaxed payment terms but make no assumptions. Call and find out what your lender says and make sure you get everything in writing.
Investigate other non-profit agencies in your area
The United Way would be a good place to start. Ask for referrals to agencies that are providing aid or simply helping people find the resources that are available.
While many, many employers are laying off or furloughing workers, there are quite a number of “essential” businesses that are hiring. This doesn’t necessarily have to be a forever career change, but if you need income, broaden your opinion about acceptable positions and make some inquiries.
Declutter and sell unneeded items
Selling your items locally might be tricky with the various versions of quarantine going on, but you might be able to sell items online just fine. Instead of looking at selling off your possessions as a hardship, reframe it into a positive: here is the chance to mercilessly declutter your home and make some money while you are at it!
Avoid raiding retirement accounts, if possible
The CARES Act allows those under age 59.5 to withdraw from some retirement accounts without the usual penalty. Think long and hard before going this route. While you do have a window in which you could put the distribution back in to make yourself whole again, it is not advisable to raid your retirement account. In addition to setting back your long-term savings, now is a terrible time to withdraw from your accounts that are invested in the stock market. Exhaust all other sources of assistance, income, and expense cutting before you consider tapping into retirement savings.
Cut all non-essential expenses
Look at your budget, or if you don’t have one, look over your bills from the past few months. What services and other expenses can you eliminate temporarily (or perhaps permanently)? Subscriptions you have might be able to be suspended or dropped down to their free level. When it comes to money management in a crisis, sometimes sacrifices need to be made!
Call your utility companies
While you are making calls to lenders, you might also call your utility companies to see if they are offering any grace period for paying bills. Some electricity companies, for example, have stated they won’t turn off anyone’s power for non-payment during this crisis.
Switch to less expensive food, cut alcohol
If you weren’t already a person that economizes on food, now is the time! Shop carefully and make sure you are using what you have in your pantry. This is the perfect time to explore new recipes with inexpensive ingredients and learn to use your leftovers creatively. Since alcohol is a non-essential (seriously, it is!), that along with soft drinks would be another easy thing to cut from your grocery bill.
What did I miss? What other things are you doing to manage your money during the crisis? Share below! Or if you want to start a discussion with some like-minded friends, join the free SimpleMoney Community on Facebook to share your thoughts!
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