How to protect your finances while you're looking for a new job

Library | 9/18/2020

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If you’ve been laid off due to the economic fall-out from COVID-19, you are not alone. Forbes reported at the end of July that a whopping 30 million Americans were currently receiving unemployment benefits – about 20% of all US workers.


And, it could get worse. The Federal Reserve Bank of St. Louis forecasted in March that 47 million Americans could lose their jobs because of COVID-19, which would push the unemployment rate above 25%— a level not seen since the Great Depression.


The important thing now is for you to take steps to protect the financial health of you and your family, cut expenses so you can live as frugally as possible, and find a new source of income. Below are 6 steps to get started on that path.


1.  File a claim for unemployment benefits.

Contact your state’s unemployment office as soon as possible. Depending on the state, you may be able to file your claim online, in person, or over the phone. The payout you receive will vary by state, but aims to replace about 50% of your previous income. You will have to meet eligibility requirements and there may be conditions you have to follow (such as actively looking for work) to continue to receive payments. Once you’ve secured unemployment, you may also automatically receive supplemental funds via a government stimulus package. 


2.  Make sure you have health insurance.

If you’ve been laid off, you likely lost your health insurance benefits. You can keep your employer’s plan for up to three years with COBRA, but you’ll have to pay for premiums yourself which can be costly. The Affordable Health Care Act provides less expensive options; go to to get register and see what’s available. When you register on the site, you’ll also find out if you qualify for Medicaid or if children in your household qualify for the Children’s Health Insurance Plan.


3.  Assess your current financial situation.

Consider your savings accounts, any assets you might be able to liquidate, as well as any supplemental sources of income to determine how much money you have to work with. Look through all your current expenses and cut the fat; you might be surprised at the things you can live without. Focus on spending on the basics first – groceries, your rent or mortgage, utilities, and transportation, and try to save whatever is left over since you don’t know how long you’ll be out of work.  


4.  Seek relief for paying your bills.

Many states have halted foreclosures or evictions for people that are unable to pay their mortgage or rent, but that won’t last forever. Contact your mortgage lender and ask about financial relief programs; many banks are reducing payments over a longer term or making other accommodations. If you rent, contact your landlord and let them know of your situation and try to negotiate a lower monthly payment. Contact all of the companies you regularly make payments to such as utilities, cable, Wi-Fi, credit cards, etc. and see what programs they have in place to assist you. If grocery bills are becoming a concern, consider applying for the government’s food assistance program – SNAP.


5.  Tap into your 401(k) – if you must.

While we’ve all been taught to leave our retirement accounts alone, desperate times call for desperate measures. Due to the CARES Act, people younger than 59½ can withdraw up to $100,000 without incurring a 10% penalty  through the end of 2020. You’ll still be taxed on that money, however, so make sure there aren’t better options for accessing additional funds.


6.  Start your job search.

Update your resume, reach out to former bosses, coworkers or work contacts and spread the word that you are seeking work. It’s possible that the industry you were in is not hiring now, so be open to different opportunities. Additionally, you may want to use this time to learn new skills, gain certifications or take classes to make you more marketable and qualify you for better, higher-paying positions. There also are a number of “essential” businesses that are hiring right now – grocery stores, Amazon, Walmart, CVS, food delivery drivers, etc. Make your job search your new job and work at it consistently to get results.


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