When the CARES Act was passed on March 27, 2020, one of its key elements was providing an additional $600 per week in federal aid to those receiving unemployment benefits from their state office. This money has provided a much-needed lifeline to the tens of millions of Americans who have found themselves unemployed due to COVID-19.
However, this federal aid expires on July 31, 2020. Congress may vote to extend it, but like state unemployment benefits, it won't be available indefinitely, which begs the question: What do you do when your unemployment benefits are drastically reduced or eliminated?
It can be overwhelming to find yourself in this situation, but there are some financial steps you can take to stay afloat until you find steady employment again.
Cut expenses: For many people, cutting expenses has been a theme in 2020, so you may already be very familiar with where your money is going. But, it can still be useful to take another hard look at where you're spending and consider ways to reduce costs. For example, if you've turned to food delivery or grocery delivery during the pandemic, you may have noticed an uptick in items you wouldn't normally purchase. Impulse buying snacks can be just as easy with a click as it is with tossing items into a cart. Aim to cook more at home or stick to your must-have grocery needs. And, if you have multiple subscriptions to streaming services such as Netflix and Hulu, pick your favorite and cancel the others. Each of these expense reductions may seem small at first but they add up, especially over time.
Contact your creditors: Times are tough, and those you owe bills to may be more understanding than you realize. If you don't think you'll be able to make your minimum credit card payment, contact that creditor, explain your situation, and find out if you can get a lower interest rate or minimum payment, or payment deferral. Similarly, if you don't think you'll be able to pay your mortgage or your rent, get in touch with your landlord or mortgage provider and ask for leniency. You may be surprised how willing people will be to work with you.
Look into part-time or temporary jobs: As you continue to seek long-term work, you could pick up some side jobs in the meantime. Grocery stores and delivery companies such as UPS and FedEx are actively hiring in many regions. You could also work as an independent contractor for companies such as Uber, Lyft, InstaCart, GrubHub, Postmates, Wag, or Rover. These side jobs don't necessarily have to become your permanent source of income but could help bridge the gap while you find your next full-time position. Make sure you check with your tax professional on the paperwork and tax needs for getting started with work like this.
Seek support from other government agencies and nonprofits: Even when federal and state unemployment benefits expire, there are other government programs that can help you stay on your feet during turbulent times. Some of these include:
Nonprofits can be another resource to turn to for help keeping your kitchen stocked, preparing for job interviews, babysitting assistance and other needs. If you're not sure where to start, the 2-1-1 Call Center can help you identify resources in your area.
At UMB, we're always here to provide support, guidance and help you navigate difficult situations, so please know that you can reach out to us anytime to discuss financial education or relief measures. Together, we can work through these unprecedented times and enjoy the brighter days that are ahead.
Nicole Watson is senior vice president and territory director of consumer services at UMB Bank.