5 Things to do if you are Suddenly Unemployed

Social distancing is great for minimizing the spread of the Coronavirus.  It is also crushing small businesses.  This week I’ve heard from several people who are now unemployed because there are no clients, customers or services they can safely offer.  There are also plenty of Americans who still have jobs but are nervous about what is coming over the next few months.  I’m hopeful that businesses will bounce back stronger than ever.  In the meantime, here are 5 things you can do if you or a loved one find yourself unemployed or underemployed.

1) File for Unemployment ASAP!

Want to know which office was probably understaffed thanks to the record low unemployment rates we had over the past few years?  The unemployment office of course!  It is important that you file your claim as quickly as possible since there are bound to be more cases and fewer people available to handle them.  To make the process go smoothly, be prepared with what they need.

If your employer is still in business contact them to get a recent pay stub and your first and last dates of employment.  Some payroll services allow you to access your pay stubs online. You will need this to verify employment. Act quickly if the company is at risk since it will be more difficult to get if they shut down.  Your personal information like your social security number, bank info and severance or pension information will be requested as well.

File online to get things processed faster and keep you healthy.  If you aren’t sure that you would qualify for unemployment it is worth trying anyway.  This situation is so unique that new legislation is being proposed to help people impacted by this sudden crisis.  For example, if you think your termination was coming before the coronavirus or you are still employed but have fewer hours – file anyway.  If you get denied but meet the state earnings or work requirements you can and should appeal.  Lastly, if you are disabled or have young children applying for SNAP benefits can help you keep food on the table.

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2) Review your Expenses

If you’ve been reading my blog you might be familiar with my “Slash and Burn” budget.  That 2018 post is more applicable now than ever.  It is time for everyone to understand where their money has been going for the past few months. Take a look at your bank statements and credit card bills.  This should give you a pretty clear understanding of where you spend your money.

One thing is certain- spending will go down substantially during social distancing since everyone is forced to live a more isolated lifestyle.  If your employer provided the health insurance benefits you may need to add a new expense either by extending your group coverage with COBRA or going to the marketplace for coverage.  If you have a spouse or domestic partner with health insurance you may be able to open their enrollment window due to a triggering event like job loss and get added to their policy.

Knowing all of the expenses you have will allow you to start ranking them by priority.  If your income is reduced or stopped you will want to act quickly to cancel the expenses you can live without until things get better.  There are some expenses you may be able to freeze like a gym membership, streaming service or daycare.  Some of these places are also closed and may be willing to work with you so you come back as a customer when they are allowed to reopen.

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3) Start Negotiations

Once you have all of your expenses lined up there will be some you can’t eliminate.  You need to pick up the phone and call them.  Job loss is a “financial hardship” and lenders are very familiar with that term. You may be able to get some temporary relief from payments or interest accruing if you explain your circumstances.  Some payments that you might not think are negotiable may be at this time.  For example, maybe you don’t think your landlord will be willing to work with you.  However, people aren’t moving around right now. Finding new tenant might be more difficult than making a deal with you.  Some cities are banning evictions entirely unless the tenant does something negligent or breaks the law.

People with student loans should reach out and explain their current financial situation as well.  While federal student loan interest might be waived that won’t impact principal due.  It also doesn’t help if you have private loans or are on income based repayment schedule.  Call and find out what they can do to work with YOU specifically.  Credit card companies are also willing to work with customers and should be on your list of companies to call.   They may be able to help you with payments and resources to help you through this.

If negotiating makes you feel uncomfortable try to picture yourself on the same team with the person or company you are working with.  They want to get paid, you want to pay them and you both want to find a way to do it.  If you approach it calmly and have all of your information ready it may provide some relief for you – and save your credit if you avoid going to collections or having to file bankruptcy.  Also, be sure to write down everything.  Knowing who you spoke with and when can be incredibly helpful if you need to reach back out and can recap your notes to someone new.

4) Make Money Moves

After you have filed for unemployment and combed through your expenses you should have a good idea of how much income you need to survive.  Some of you may have enough saved in your emergency fund or a family member that helps pay the bills at home.  If so, use this opportunity to review your budget carefully and start saving as soon as you are back on your feet.  Avoid bringing on any new debt during this time since isn’t the time to be shopping (read this if you are a stress-shopper).

Pay attention to the government assistance programs that exist or may be created to combat the financial downturn the coronavirus is causing.  Be ready to act if there is a process in place for people to get help.  Keep all your unemployment documents organized and ready to go.  When Mnuchin opens up that wallet I want you to be prepared to get that money.  Also, see what you can do to make money from home.  Social distancing is the perfect time for everyone to go through your closets find things you can sell on sites like Poshmark or Ebay.

For those of you that have money saved for retirement it may be very tempting to take it ALL out now.  It is very hard to prioritize the future when you are struggling today.  I get that – but please save that for a last resort.  First of all, the stock market volatility has likely impacted your account balance.  Locking in those losses now plus paying the applicable taxes (and possibly a penalty) will reduce what you get dramatically.  Compare that to what that money could be in 10, 20 or 30 years if you leave it alone.  If you need a distribution take out enough to get by for a few months and keep the rest invested. A lot can change in a few months and you can’t put the money back into your retirement account if it is out for over 60 days.

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5) Use this Time Wisely

Please don’t use this time to beat yourself up.  There was no way you could have predicted this or prevented it.  As we all adjust over the next few weeks it is a good time for everyone (employed or not) to reflect.  Most people I know are far meaner to themselves than other people.  Luckily for us, our thoughts are 100% in our control even when everything else is chaos.  Here are a few questions I think you should ask yourself:

  • What don’t you miss now that you are home?
  • Were you creating the life you wanted before?
  • Were you excited about your work?
  • What would you do if money wasn’t your main concern?

It’s ok to be sad, scared and frustrated.  I beg you to be kind to yourself though.  Once you are ready to dust yourself off check out all of the free resources that are available to help you.  There has never been greater access to online learning and jobseekers need to keep their skills sharp.  If you have had the same job for a long time spend some time updating your resume to reflect what you accomplished.  Stay connected to your network as well.  Lots of people are sitting home by their computers ready to engage.  Look for inspiration and try to connect with people and activities you really enjoy.  Maybe you don’t go back to doing what you did before once business picks back up – and that’s ok.  We are all learning how to do things differently these days.

What has been the most surprising impact this has had on you? If you know of any great resources available for people who are struggling please share them in the comments.

If you aren’t sure what the next right move for you is and want to discuss investments or a financial plan let’s talk.  

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