5 Things to do if you Lose Your Job due to Covid-19

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1. File For Unemployment

If you have been laid off or furloughed don’t waste any time in filing for unemployment. With the Federal government contributing an additional $600 per week over and above your weekly unemployment state benefits you wouldn’t want to waste any time in filing for unemployment especially since the $600 additional Federal weekly unemployment benefits expire on July 31, 2020. Post that date unemployment benefits would revert back to the state unemployment benefits that you would usually qualify for.

Say for example if you live in NJ and are eligible for the maximum unemployment benefit of $713/week, the added contribution of $600/week from the federal government would take your weekly unemployment benefit to $1313/week which is equivalent to a very healthy $68,000/year.

2. Freeze your Mortgage and Rent payments

The coronavirus crisis has generated record-breaking unemployment claims for more than 33 million American workers so far — and that’s making it hard for affected homeowners to afford their mortgage payments.

Mortgage forbearance is a temporary pause in mortgage payments approved by your lender. The lender agrees in advance to allow you to stop making payments, or make a reduced payment.

The Coronavirus Aid, Relief and Economic Security (CARES) Act includes mortgage relief programs that allow you to request a 180-day forbearance, followed by one 180-day extension if you need it.

In other words, borrowers with federally backed loans have the option to request forbearance for up to 12 months — also known as a forbearance period. During this time, your credit isn’t negatively impacted by not making payments, and the foreclosure process is halted. Repayment doesn’t begin until the forbearance period ends.

A forbearance is ideal for people experiencing a temporary, short-term hardship, but it’s not a permanent solution.

What about rent? If you’re renting, contact your landlord and discuss your options. Again, a landlord is far more likely to want to work with a proactive tenant who is addressing these problems upfront than one who just dodges trying to pay their rent. You can work together to come up with a system that keeps the roof over your head for a while. This is particularly true in times of economic uncertainty, where a landlord is unlikely to be able to fill the property easily if you’re evicted, but even outside of those periods, there’s still some risk for your landlord and a period without any rent coming in.

I would advise you not to take unfair advantage of this provision that the states are providing. Only use these provisions in case of a job loss or reduced employment.

To learn more about Mortgage Forbearance read the post above

3. Cut your variable costs – Cancel any recurring subscriptions.

Now is the time to look at eliminating or reducing your nice-to-have unnecessary subscriptions.

  • Magazine subscriptions
  • E-book services
  • Video-streaming and pay-TV services
  • Mobile apps with monthly fees
  • Gym membership (If you haven’t already done so)

There are now multiple services that specialize in finding and canceling any memberships, subscriptions and other recurring expenses you’re paying for, but not using.

Others can negotiate lower recurring expenses on your behalf. For example, imagine having your internet bill slashed without ever needing to pick up the phone to argue with the internet provider.

Examples of services and apps that can find and cancel subscriptions, negotiate lower bills or both include:

These services are typically free, at least at the outset. If a service can negotiate a lower bill for you, it often takes a small percentage of the money it saves you as a commission. But you generally won’t be charged if one of these services is unable to net you savings. So, it’s essentially free to try them.

Subscription services while they may individually look small on a monthly basis but they collectively tend to add up quickly. A monthly fee of $15.99 from Netflix and Apple Music at $14.99 ends up being $372 a year – Money you could ill-afford in unemployment. The goal is to trim as much of the fat as possible from your budget to preserve as much of your income and savings as possible. 

4. Lower Your Insurance payments.

Don’t make the mistake of cancelling your car insurance policy during the pandemic — as you could pay a penalty for gaps in coverage, but policyholders can still lower their monthly payment but lowering the miles driven for the vehicle. Call the insurance company to make that change.

If you currently have 2 cars immediately switch one (the one that you won’t be driving) to the lowest 3rd party liability insurance allowed by your state. Along with lowering mileage on your second car, this should make a significant difference in your monthly insurance bill.

If you have a leased car that you no longer need or can’t afford to make the lease payments due to loss of a job. Use swapalease.com or leasetrader.com to transfer the lease to an interested party.

5. Assess your immediate financial needs

Utilities – Most utilities don’t want to cut off service for customers unless they’re truly being negligent on their bills. Many utilities offer relief programs for recently unemployed folks, particularly those with dependents, and this is particularly true during the current crisis. You’re far better off being proactive here and calling now rather than waiting around until you’re missing payments.

Other Debts – If you have any student loans, contact the lender and pause them. Most student loans allow you to “pause” payments during periods of unemployment. If you have other debts, contact the lender as soon as possible and discuss pausing those debts, too. Many lenders will work with you to pause your debt payments during tough financial times. Again, the key is to be proactive and work with them upfront rather than waiting around until you’re missing payments.

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