Another 1.5 million Americans filed for unemployment benefits last week to receive unemployment benefits, with payments currently going to about 19.5 million people, the government reported Thursday.
A weekly increase in benefits has made unemployment a little easier for those who lost their jobs due to the coronavirus, but will soon have to survive without the extra money.
The Coronavirus Aid, Relief, and Economic Security Act, the CARES Act that also brought you those stimulus controls, provides an additional $ 600 per week of unemployment through July 31. Lawmakers have not promised an extension.
Standard unemployment payments vary from state to state, and depending on where you live, you may have trouble making ends meet with regular benefits only.
Here are nine things you can do to prepare to deal with a smaller weekly payment.
Fill your emergency fund while you can
While you still have a few weeks left on the $ 600 bonus, try reserving it to shore up your emergency fund.
Most financial planners suggest saving enough to cover at least six months of your regular expenses, but any amount you can save right now is fine, especially if you’ve already needed to dive.
The worst place to park your emergency fund is in a garden savings account that could pay a pathetic 0.01% annual interest. Instead, look for a high-yield account where your savings accumulate more interest and grow over time, so you have more money available when you need it most.
Rates may vary from one financial institution to another, so be sure to compare your options online.
Reduce monthly expenses.
Once the $ 600 bonus ends, you will likely have to adjust your budget to compensate. The sooner you can cut your expenses, the easier the transition will be.
Start by making a list of your typical monthly bills and expenses, and try to identify areas where you can cut costs.
For example, consider cutting your cable and switching to a less expensive streaming service. If you already use one, consider canceling it for now and taking advantage of the free trial periods.
You can also save a surprising amount on food by preparing your meals at home instead of ordering. If you use a cash back card to buy your groceries, you will receive a little money every time you buy.
Defer payments whenever possible
During the pandemic, several lenders, banks, and utility companies have been giving clients a break to help them cope with financial stress.
If you are concerned about your ability to make your mortgage payment once your unemployment benefits are reduced, you may be able to suspend your mortgage through what is known as leniency. You are eligible for up to a year of tolerance if you are dealing with financial difficulties and, like most borrowers, have a federally backed mortgage.
When you are ready to withdraw your mortgage from the “break,” you can make the late payments in one lump sum, increasing your monthly payment amount for a period of time or making additional payments at the end of the loan term.
You may also be able to defer your auto insurance payments, as many companies have lowered their premiums and instituted new payment plans in response to the blockage.
If your auto insurance company isn’t willing to give you a break, it might be time to start looking for a better one.
Extend your job search
You have probably been looking for a new job for a while, and if you work in an industry that has been particularly hit by the pandemic, your prospects may seem bleak.
If you’re not against relocation, you can try expanding your search to include positions outside of your home state.
You should also consider looking for work outside of your chosen field if you’ve fallen short of your usual search terms.
The thought of getting out of your comfort zone can be daunting, but you might be qualified for all kinds of jobs you don’t know about. Certain job boards will even use artificial intelligence technology to pair you with exciting new positions based on your skill set and experience.
Earn extra money with a side concert
While looking for your next full-time position, you can contribute a little extra money by picking up a concert.
If you can sell your skill online (think of things like copy editing, voice acting, graphic design), a number of digital markets will pair you with eager buyers across the country.
Another option to bring some quick cash is to enroll in an online rewards program.
You can earn money and gift cards by completing simple tasks like completing surveys, watching viral videos, and playing games on your smartphone. It won’t give you enough to pay the rent, but it can cover your purchases during the week. At times like this, every little bit helps.
Get a break on your student loans
Most people with federal student loans are already doing so. Automatic payments have been paused until October, and interest rates have been temporarily reduced to zero.
However, if you are in debt from a private student loan, you are still required to make your monthly payments. Try contacting your lender to see if you can negotiate a different payment schedule.
You can also save some money on your payments by refinancing your student loan, that is, paying it off with a new loan that has a lower interest rate.
It is difficult to qualify for refinancing when you are unemployed, as you generally need to demonstrate consistent income. Depending on your situation, you can list investment income, freelance work, or even your unemployment benefits. A cosigner could also help.
If you qualify, refinancing could save you thousands of dollars in interest over the course of your loan and reduce the time it will take to pay off your debt.
Consolidate your credit card bills
If you have multiple credit cards, trying to make the minimum payments on all of them with $ 600 less dollars every week could be a struggle.
You can try calling to see if you can defer some of your payments, but you will probably still be looking at the interest you owe. Credit cards come with some of the highest interest rates of any financial product, and as interest increases, the amount you owe can quickly increase.
An option that can help is a debt consolidation loan with a lower interest rate. You will be able to pay off all your existing debts right away and only have to pay a single monthly payment.
Just like refinancing a student loan, it will be difficult to qualify while you are unemployed. But if you have good credit, it is definitely worth investigating to see if you can save some money.
Dive into your retirement accounts
Although this option should only be used as a last resort, you may be able to steal from your retirement accounts if you need it urgently.
The CARES Act allows you to make a “financial hardship withdrawal” of up to $ 100,000 from your 401 (k) or traditional IRA without penalty until December 31, 2020.
You will be asked to pay income tax on the money you withdraw, but you will have a three-year window to do so. Anything you borrow and put back into your account will not count towards your annual contribution limit.
Remember, all of that money in your retirement account can be tempting, but logging in now could mean pulling out years later than planned.
Stay up to date on government relief efforts
Given that the unemployment rate is still hovering near record highs, there is a clear possibility that lawmakers could extend the $ 600 bonus in the coming weeks, before the July 31 end date.
Although no one is sure when (or if) an extension will be announced, they will want to keep an eye out for news and watch out for any major updates before doing anything drastic.
The last thing you want to do is withdraw your retirement account when relief is just around the corner. Explore your other options first so you can hang on as long as possible.
