What Are Your Options if COVID-19 Cuts Your Income
COVID-19 has forced countries around the world into a complete lockdown as government officials advise people to avoid large gatherings and self-isolate at home. This has led to a growing number of companies and organizations closing up shop, cutting their number of services, and canceling events.
While this will play an important role in flattening the curve, it is still bad news for many people who will (or have likely) lost their jobs or have had pay cuts.
If calls for social distancing have hit your home, then this guide is for you.
1. Apply for Benefits You’re Entitled to Receive
Because of COVID-19-related shutdowns, the government has rolled out benefits packages for workers who have been furloughed as a result. You don’t have to lose your job to apply. If you’re in quarantine and can show that you’re not receiving a paycheck but will eventually return to your job, you may qualify for unemployment insurance.
Every state has set its own rules for benefits and eligibility, which are based on your income, up to a certain maximum. Some states have higher maximums than others, but even the worst case scenario sees you replacing about 45% of your income. It is worth noting that most states will only offer coverage to full-time employees and have made it slightly difficult for freelancers to receive coverage.
Other benefits that you could receive include expanded food assistance, cash benefits, and paid sick leave. To see if you qualify for these benefits, make sure to visit the official Department of Human Services website in your state.
2. Find Ways to Save Money
In these trying times, the best course of action would be to save as much money as possible to prepare for an uncertain future. Now would be the perfect time to identify and cut down on unnecessary expenditures.
The lockdown makes it relatively easy to save money on entertainment spending, but you can maximize savings by cooking food at home instead of dining out. That being said, make sure to invest in healthy ingredients such as brown rice and in-season vegetables. Your immune system is of utmost importance more so than ever before.
3. Lower the Cost of Expected Medical Care
There may be a chance you’ll need medical care as the pandemic rages on. You can minimize the cost of healthcare by contributing to a health savings account (HAS). Furthermore, you can make tax-deductible contributions of up to $3,500 on individual coverage and $7,000 on family coverage for 2019.
Moreover, you can still make contributions for last year until tax day comes this year, which has been delayed by three months due to COVID-19. This is important because you’ll lower the taxes you owe to the IRS. Paying for your healthcare with pre-tax money can save you big time, and should you need urgent medical care, you’ll have money available to cover your coinsurance costs and deductibles.
4. Refinance Your Monthly Payments
The Federal Reserve slashed interest rates down to 0% to stimulate the economy during these trying times. While this won’t reflect 0% interest rates for individuals, your bank may be willing to negotiate much lower interest rates for you. Try securing lower interest rates on personal loans to make monthly payments easier for you. The same also applies to your mortgage payments if you’re a homeowner.
5. Sign up For Federal Deferment
If you’re struggling with federal student loan payments, you can temporarily suspend payments using either deferment or forbearance. The option you qualify for will depend on your specific circumstances, but in typical cases, you can pause payments for a total of three years over the lifetime of the loan. While interest rates would normally continue to accrue during deferment and forbearance, the US Department of Education has announced that interest on federal student loans will be waived until further notice.
6. Talk to Your Creditors
If you’re facing difficulty paying your bills, including credit card and utility payments, it may be worth reaching out to your creditors and companies. Most private financial institutions and other businesses are temporarily pausing payments on late fees and are actively trying to help their customers affected by COVID-19. You may get the much-needed relief if you contact them directly.
We’ve faced difficult times before and have made it through. Our economy may be compromised because of COVID-19, but the government and businesses are actively pooling their resources to keep us all afloat. In many cases, it’s just a matter of reaching out and asking for help. Our biggest advice is to cut back on your spending and take care of your health.