Are you wondering what to do if you are laid off during COVID? We find ourselves in unprecedented times. Tens of millions of people are being furloughed and laid off. Fortunately, you have a choice you can make to take advantage of the situation to better yourself. You can choose to sit around and do nothing, or you can choose to increase your skills and marketability.
Working on your finances is a big part of keeping yourself in line, and with less stress. Know that you are not the first, nor the last to be laid off. Most people will find their way to a new job. Even with the current situation, companies are still hiring. Go over your life and goals, and come up with a new plan. Here we will show you some things that are of extreme importance during this time.
Go over your budget
The first thing you need to do when you find out you are being laid off is to review your budget. Depending on your company, you may be offered a severance package. This money is meant to help you through the time before you find a new job. Unfortunately, the money may not be enough depending on how long you are unemployed. This is why it is so important to look at your budget right away.
You’ll need to get a handle on your bills. Write down your bills on a piece of paper, or in a spreadsheet. Depending on your financial situation, you may need to temporarily stop paying some of your bills. We recommend making sure that you have your Four Walls covered first, before paying any other bills like credit card debt. Your Four Walls are the basic structure of your life, without them, you will find yourself in dire straights. The Four Walls include Food, Utilities, Shelter, and Transportation.
Food is a natural requirement for life. This has to be your first budgeted item. You won’t be able to pay any others without it. Unfortunately, due to the fact that you are in a new financial situation, you may need to reduce your food consumption or buy off-brands for a while. Also, eating at restaurants is a big no-no. But, at least in our current Coronavirus situation, that’s not a big issue for now. Make sure to check your local grocery circular, as they will give you an idea of what is on sale, and possibly have some coupons you can use to reduce your cost. While you should always be shopping with coupons when possible, it is even more important while you are unemployed after a layoff.
Utilities like water, gas, or fuel are secondarily the most important part of your budget. If you don’t have electricity, your refrigerator will not run, and no amount of coupons can help you save the food that will be lost. Similarly, you require things like heat and cooling depending, of course, on your geographic location. It is best to use less energy if possible during this time. You may not be able to keep your house heated or cooled at the same levels. Try to wear appropriate clothing so you can avoid losing money to the high cost of utilities.
Shelter is a top priority. Without it, you have no place to store your groceries or keep your house heated. This has to be your third highest priority. Check with your financial institution to see if there are any programs to help during this coronavirus crisis. Pay your rent and mortgage first, that way you will still have shelter during this storm.
Transportation may not sound like the most important item on your budget during this time. However, you won’t be able to get all of your needs like groceries if you don’t have transportation. It would also be difficult for you to go for an interview if it has to be on the property for a company. Not to mention that you will probably require transportation to and from a new job.
Pay at least minimums on credit cards and loans
Keeping your financial matters as up to date and paid as possible will help with your stress levels, and will keep the costs of credit lower. Right now the goal is to pay at least the minimums on all of your debt and save the rest for the unknown. If you are still able to pay your full amount, do so. However, don’t be too upset if you have to take a break and lower the intensity of your debt-free plan.
Redirect any extra funds to a savings account until the storm passes. If you are only paying the minimum on your credit cards but still have money left over, keep that in a separate account. You are going to find a lot of places where you may need to spend money during this time. It is best to have cash on hand, rather than giving it all to your creditors.
Negotiate with creditors
Now is a good time to negotiate with creditors. You have a legitimate life event where you may require some leniency. Call and let your creditors know if you are going to need to stop paying for any reason. See if there are any programs that may help you during this time.
You probably don’t need to spend every dollar you were spending while employed. If you don’t need subscription services, you can cancel them and pick them back up when you are employed again. This is not to say you should stop all of your entertainment services, you will need to spend time relaxing. Most of these services are only a few dollars a month, so they aren’t going to break your bank. However, there are always some items that you can go without. Take a hard look at your budget, and see where you can cut out the fat.
Find new sources of Income, including Unemployment
Once you have a look at your budget for costs, you will also need to look at your income sources. Now that your primary and largest source of income has been suddenly removed, you will need to find new sources of income.
Apply for Unemployment
Chances are that if you were employed full time, your employer has been paying into Unemployment Insurance. On your first day of unemployment log into your state’s unemployment insurance system and open a new claim.
If you have never consulted, this may seem like a daunting idea. However, companies need people with skills to help them advance their goals. Sometimes it is simply cheaper to pay a consultant for a short time to do the work that would otherwise require a full-time person. There are many companies whose job it is to recruit consultants. You can find these on any job search site by choosing Consultant instead of Full-Time or Part-Time.
Not all consultant work is brokered by agents. If you have knowledge of firms that may require your help, feel free to send them a polite email asking if they require your services. Detail your skills and how you may be able to help them.
Learn new skills
Now is not a time to rest on your laurels. The job market moves quickly, and business requirements change all the time. Adding new skills will help in your employability You should be focusing on learning at least a few skills a week to help in your career search. There are many good learning sites like LinkedIn Learning which is only $30/mo. You can buy courses directly on sites like Udemy.com. Look through and find skills that will help you promote yourself in furthering your career.
Health Insurance Don’t forget about insurance at this time. You may require medical services, during unemployment. If you have a spouse or life partner, you may be able to get on their insurance. This would be the best thing to do if it is possible. Usually, when you are laid off you can get onto a COBRA health insurance plan. They are expensive, but it may be cheaper, in the long run, to pay for Health Insurance if you have a health issue. Watch out for third party health insurance, sometimes those are not as great a deal as they seem. You may be better off applying for your local government’s health insurance. Some states have very good health insurance for unemployed workers.
Life Insurance is always a top priority. Especially if you have a family. Many companies will pay for your life insurance while you work for them, however, this rarely will follow you after being laid off. If you have a family and don’t have life insurance, now is a good time to start looking into Term Life insurance. Term Life insurance covers you for a specific time when your family is most at risk of instability if you are to pass away unexpectedly. Term Life insurance isn’t as expensive as some may believe. You really only need life insurance for 20-30 years depending on the amount of time it will take for you to save enough money for retirement. Take this into consideration when you are looking for insurance.
Now is not a time to be without an emergency fund. Even a small emergency fund of $1000 can help you make it through a trying time. If you have emergencies like a nail in your tire, or your car needs a new alternator, you can cover those expenses with the $1000 Emergency Fund. If you are further along your debt-free journey, you may be able to save more. Ultimately you want to try to get at least 3-6 months of funding for emergencies. Ultimately, you will want to have 18 months or more in your emergency fund. This is because the longest recession we may go through has been up to 18 months. You want enough money to get you through in the case of a recession or depression. You should keep this emergency money in a separate account where you can get access to it in a day or two.
Don’t forget about your health and well-being
Your health and well-being during this time are of utmost importance. Keep up with relationships, and exercise. It is important for you to keep your relationships strong to maintain your support system. This is even more important during these formidable times.
Exercise will help keep your mind and body in shape. Now is a great time to start working on yourself. Exercise doesn’t have to be
Resilience at this time is your greatest asset. Now you know a little about what to do if you are laid off during COVID. You need to do work to help you return to employment as soon as possible. You may need to pause your debt-free journey until you return to work. Only pay the minimum if that is all you can afford at this time. Keep your head up, you will most likely be back to work sooner than you think.
Work with a Debt Coach
Our debt coaches have all been in your shoes. In debt, and worried. We coach because we want to help others get out of the oppression of debt in your lives as we did. Let our Debt Coaches help you find new ways to get out of debt, live life, and build wealth.