What To Do If You Just Lost Your Job.
A step-by-step guide for the newly unemployed.
Things are bad in the job market right now, and they’re only going to get worse.
- Coronavirus jobs survey: 49% of companies considering layoffs, more than one-third freezing new hires
- Coronavirus job losses could total 47 million, the unemployment rate may hit 32%, Fed estimates
- Spike in unemployment filings overwhelms state systems
- ‘The whole city laid off’: US jobless claims climb sky high
Odds are, you or someone in your family will be laid off, furloughed, fired, or otherwise unemployed in the next few months.
Not good.
So what can you do? Well, quite a bit, actually
There are several concrete steps to address your finances in the face of a recent job loss, and the recently passed CARES Act can help even more.
So let’s dive right in.
Income
It might be weird that I list income as the first thing to address after being laid off but stick with me.
On average, you will have two weeks to try and replace your income with a patchwork of other sources. Once that two weeks is up, then you’re on your own, and no one is going to just give you money.
Unemployment Income
I understand that it will take more than just a day or two to find your next job, so I’m not talking about replacing your salary. Rather, you need to file with the unemployment office ASAP and get your unemployment checks starting.
With 3.3 million new unemployment claims during the last weeks of March, the offices are going to running behind, so get your claim in quick!
Also, the CARES Act adds $600 per week on top of whatever your state would pay you. This extra money will last for four months of unemployment, before dropping down to just the state level payment.
(Former) Job
Also, you need to make sure that any time worked, vacation, sick, or other not-yet-paid time from your old job is processed properly and added to your last check. This will probably include a few uncomfortable calls to HR, but it will be worth it.
(Besides, you don’t work there anymore, remember? So you can afford to have those uncomfortable calls with little to no consequence!)
(Future) Job
Next, you need to get your resume updated and sent out PDQ. Human Resources is a black box that takes months to get through in a normal economy, much less one that is probably already in a recession. If you want to get back to work full time, then you need to follow the adage and make finding a job your full-time job.
I’ll also give you this advice. Amid the turmoil we are all going through right now, it might be a good time to reevaluate what type of job you truly want. Are you in the right career, company, or location? Do you have kids that you want to stay home with instead of sending them to daycare?
In the meantime, you can always work on that side hustle that you’ve neglected for so long. (Writing on Medium, anyone?) You will be flabbergasted at what people will be willing to pay for, and the opportunities to help those in need will skyrocket over the next 6 months.
Still, have your job? Well, now is the perfect time to begin, as it will give you a head start for if/when you do get laid off in the future.
Government Money
This would normally not be included in a list of this type, but these are not normal days.
The federal government just approved payments of $1,200 for every adult and $500 for every child, payable directly to your checking account. If you filed your 2018 or 2019 taxes like you regularly do, then you’re fine. The money will be deposited sometime this spring.
However, if you didn’t need to file the past two years, you will need to file a simplified version this year to receive the money. Check out the IRS for more information.
Expenses
This is the meat of the matter. Even if you get the full unemployment amount, your vacation payout with your last check, and some dough from your side hustle, you will probably not bring in your old salary at the outset of unemployment.
So that leaves us with cutting expenses. In order, you need to address:
- Housing
- Food
- Transportation
- Health Care
- Debt
Housing
Your home is the first place to financially secure.
Before even food in your belly, you want a roof over your (and your family’s) head. It provides shelter from the elements, a place to store and cook your food, and somewhere to sleep and recover.
Mortgage
If you own your home, the first step is to call your bank or loan servicer and tell them you lost your job. Explain that you are working on finding a new job, but that you just cannot make the payment in the immediate future.
Evictions are costly for these companies, so keeping an honest homeowner that just happened to fall on hard times is better than paying for an eviction and risking an empty house just sitting there with no recourse. (This is a probability given the intensity of the upcoming recession.)
About half of all mortgages are financially guaranteed by Fannie Mae and Freddie Mac, and they have agreed to suspend all evictions and foreclosures for homes owned by them. The same is true for mortgages backed by the Federal Housing Authority.
And here’s the biggie.
Fannie and Freddie have agreed to expand their forbearance program, allowing homeowners to suspend their payments for up to a full year.
Just remember, call your loan servicer early and often to get them your most up to date information and find out if your mortgage qualifies for the extended measures.
Rent
Renting is a double-edged sword right now.
On the one hand, you don’t have a multi-hundred-thousand dollar asset that you are at risk of loss due to missing payments.
On the other hand, evictions are easier and quicker than foreclosures, which can result in you being without shelter much sooner than homeowners.
There are no national protections for renters, in either apartments or homes. That being said, most rental agreements have specific language for late or missed payments.
If you need financial leniency beyond what is spelled out in your lease but your property manager is holding you to your payments, start calling the corporate office. Odds are, you’re not the only one in your apartment complex, so talk to other tenets and start mass calling.
For those of you renting an individual home, contact your landlord immediately and let them know what’s going on with your income. Since most rental homes are owned by individuals running an extremely small business, they may have more flexibility than the manager of an apartment complex that is held to a standard sent down by the corporate office.
Utilities
Many states and municipalities have required utilities to cease disconnections and shut-offs during the coronavirus pandemic.
Government bodies have ordered disconnection suspensions statewide in California, Colorado, Connecticut, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and Wisconsin. West Virginia regulators are “urging” utilities to suspend disconnections.” — Energy and Policy Institute
These utilities include electricity, natural gas, and water.
Other monthly “utilities” that have provided shutoff protection include phone companies and internet providers. A couple of examples:
- ATT is suspending the termination of wireless, home phone or broadband service when customers can’t pay their bills because of coronavirus disruptions.
- Comcast is providing free access to any Xfinity wi-fi hotspot for 60 days starting April 1.
- Verizon will waive late fees for the next 6 weeks.
See a longer list of company responses here.
With so many companies offering some relief during the pandemic, call everyone you have bills with and see what they can do to help.
Food
The first rule of saving on food? Stop going to restaurants.
The second rule of saving on food? Stop Going To Restaurants!
Yes, I just invoked Fight Club, but that’s how serious I am.
While so many restaurants have switched to take-out or delivery only, they still cost an arm and a leg when you don’t have as much as a finger to afford it.
So stop. Just stop.
The follow-up to this is that you need to learn to cook. I’m not saying that you need to perfect pheasant under glass, but you do need to master the basics.
- Beef stew
- Pot roast and veggies
- Baked chicken
- Eggs (scrambled, sunny side up, fried, poached, hard-boiled, soft boiled, etc.)
- Po-tay-toes! Boil ’em. Mash ’em. Put ’em in a stew.
While you’re stocking your pantry, forgo the one-day-at-a-time shopping and start buying in bulk. If you’re sheltering-in during your unemployment (as you should be!), then you’ll use up that 5-pound sack of rice from Costco quite quickly.
Lastly, whatever you cook, you need to eat.
Made a huge lasagna last night and still have 11 out of 12 servings left? Guess what you’ll be eating for the rest of the week.
Learn to live with culinary repetition.
Transportation
In regular times, transportation would be damn near essential, as you would need to travel to job interviews. However, during this global pandemic and the social distancing we are all practicing, transportation has lost its importance.
Unfortunately, it has not lost its pre-virus cost.
Personal Vehicle
If you bought a new car from the manufacturer and have a loan from their finance arm, then you will probably qualify for one of their delayed payment options. Car financial arms who have these programs include Ford Credit, GM Financial, Honda Financial Services, Hyundai Capital, Nissan Motor Acceptance Corporation, and Toyota Financial Services.
Just how generous are these programs? Take a look.
In one of the most expansive programs, Hyundai Motor America’s Assurance Job Loss Protection will make up to six months of payments for new owners who lose their jobs and have purchased or leased their vehicles between March 14 and April 30, 2020, through Hyundai Capital.
If you don’t have a loan through a manufacturer’s financial department, you should, “reach out to the financial institution that made the car loan or financed the lease even if that lender is not linked to the manufacturer. This will enable the customers to discuss their options, which can include flexible payment arrangements and payment extensions.”
From the same article, by reaching out to the leasing company, “[l]essees might be able to arrange deferred lease payments as well.”
U.S. News & World Report has a good overview for those in need of car loan assistance.
Other Options
If you either don’t own a car or can no longer afford your current one, then try some other transportation options that you may have ignored.
These options include,
- Mass transit (maybe not so much during a pandemic)
- Bicycle or other manual modes of transport
- Bumming a ride off of trusted friends and family
- Walking, if locations are nearby
Logistics can get a little tough without your mode of transportation, but there are many options available, even with a virus spreading across the globe.
Health Care
If you don’t have your health, you don’t have anything.
This is especially true in the middle of a global pandemic. Yes, you might only be able to afford catastrophic health insurance right now, but a pandemic is the definition of a catastrophe. So make sure you’ve got something.
Unfortunately, if you were on an employer-sponsored healthcare plan, then you might be royally screwed on this one.
The costs of COBRA are outrageous, and the Obamacare options are just slightly less painful. Plus, heaven forbid you get COVID-19 or some disastrous illness, your deductibles, and out-of-pocket costs could bankrupt you.
So what can you do?
- If you’re married, you can switch to your spouse’s plan, as spousal job loss is deemed a “qualifying event” for mid-year insurance adjustments. For example, my wife works at a university with fantastic health coverage, but my municipal job offers coverage that wouldn’t break the bank.
- If you’re single, then you could be eligible for Medicaid, or a state-sponsored equivalent. Here in Indiana, we have the Healthy Indiana Plan, colloquially known as HIP 2.0.
There are also alternate health “insurance” plans to explore, such as faith-based health-sharing plans, the most popular of which is Medi-Share. Since these are technically not insurance plans, they do not need to abide by federal insurance requirements (e.g. they may not cover birth control), but they could do in a pinch.
Regardless of which option you choose, read the details carefully. I cover this in more detail in a previous article, Let’s Do the Math: Health Insurance.
Pro Tip: If you were enrolled in a high deductible health plan and contributed to a Health Savings Account, you can take those contributions with you to your new health plan.
Debt
Total US household debt just reached $14 trillion in February 2020, so March was a bad time for the coronavirus to spread here. But, it’s here, and now we have to deal with it.
Credit Cards
Credit card companies are among the many who are providing financial relief shortly. If you can’t pay your cards, call your card company! They’ll be happy to work with you.
However, if you can’t afford your payments in the long term, you need to think about how to juggle that debt.
You could always do a balance transfer to a 0% card. The fee associated with this is normally 3%, and you can get up to 21 months of interest-free credit.
If you can’t get approved for that, then follow these scripts to lower your interest rate and reduce your payment. Just 30 minutes can save you that little bit that is so important right now.
Federal Student Loans
If you are struggling, then you can pause your student loan payments on federal loans through September 30, 2020. No interest will be collected, and your repayment status will not show as being delinquent.
I highly encourage this move, as student loans are such a big financial suck.
Next, you need to get on the lowest repayment plan you can for when you do finally start paying on your loans in October. Most Income-Driven Repayment (IDR) plans to cap their payments at 10% of your discretionary income.
Private Loans
The basic advice here is to refinance your loans. With interest rates at historical lows (and that’s no joke), now is a great time. It will lower your monthly payment and lower the total amount paid back.
Also, as with just about every other financial burden on this page, you need to call your loan servicer. They will have the most up to date information on any special assistance they have available beyond the standard refinancing.
The Takeaway
The current coronavirus pandemic is a once-in-a-lifetime event, and it will take years or decades for the impact to be completely realized. As such, we need to financially protect ourselves for the coming turmoil, ready to pivot to the next opportunity when it happens.