Job Loss Tips–How Can I Survive Sudden Lack of a Job?
Through no fault of your own, you find yourself jobless. Maybe the loss stemmed from the Coronavirus (COVID-19) or something else you had no control over. Now what? Where can you find useful job loss tips to help you cope with this?
The first question to answer is: Is the break short-term or long-lasting? If you lost your job due to the pandemic, did your employer furlough you for a while? In that case, focus on getting through this period of unemployment.
However, if your employer has closed or you want to change jobs or careers, you need to look at other actions. You can find many helpful job loss tips in this report.
The First of Many Job Loss Tips: Secure Your Finances
Whether the unemployment is short-term or permanent, one of the key job loss tips says: look at your finances. This includes personal finances as well as any benefits due to you–from your company or government sources.
One of the biggest mistakes many people make after losing their job is not trimming their finances quickly. We can’t predict the full pandemic impact, so you could be out of work for four weeks or four months. No one knows right now.
However, if you were living paycheck-to-paycheck before, you can expect some impact on your finances. So here are a few job loss tips to help you tackle this task.
First, change your lifestyle to fit your new financial reality … at least for now. Conserve as much cash as you can.
List your current expenses (review your check register, credit card statements, and/or online banking profile) and see what you can cut. Decide which of your current expenses you must continue (mortgage and car payments, utilities, food, etc.) and which ones you can do without for now. The sooner you make these changes, the better off you will be.
Once you know what you’ll have to live on (unemployment benefits and savings, for example), you can decide if you need to find other income sources, such as a part-time job. (Such income could affect your unemployment benefits. However, you may need the money until the payments start–maybe 2-4 weeks or longer.)
Long Unemployment & Special Help
You can’t magically attract money from nowhere. If you stay out of work for a long stretch, you might need to start making just minimum payments on your bills. Although now is not the time to hold a garage sale, you could find items you can sell on Facebook Marketplace, buy/sell/trade groups, or Craigslist. (Be sure to limit contact with buyers — for example, take payment by PayPal and do porch pickup.)
Try to avoid tapping into your IRA or selling investments while the stock market is down. If you have a cash-value life insurance policy, you might consider using it for emergency cash. Remember, though, that you will have to pay interest on any loans you take out. Also, you’ll want to repay the loan as soon as you can.
If you struggle to pay your mortgage payment or other bills (credit cards, auto loans, student loans), contact your lender. Many of them have programs allowing you to reduce or skip payments (adding missed payments to the end).
Even More Job Loss Tips to Help You Cope
You might qualify for special programs for those out of work. For example, the “Home Affordable Unemployment Program” may reduce your mortgage payments or suspend them for a set time.
Your credit card company might reduce your interest rate or lower your required minimum payment due to a job loss. (If you have involuntary unemployment credit card insurance, your card company might cover the payment if you are laid off for a specific time. However, this excludes charges incurred after the layoff.) Act now to explore your eligibility for these programs.
In the case of a furlough, your company might have shared details about the benefits you can get. If your company pays part or all of your salary while you’re at home, that should be stated in the information you received. Likewise, if you don’t receive your salary, you might be able to access accrued vacation or sick pay. If you have company-provided health care, find out if your employer will pay the premiums during your unemployment. (Otherwise, you will need to obtain temporary coverage.)
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) eased restrictions for using IRA funds. The new law allows workers hit by the pandemic to cash out up to $100,000 of their 401(k) or IRA accounts. (This includes people diagnosed with COVID-19, their spouse or dependent. In addition, undiagnosed people can take a Coronavirus Related Distribution (CRD) if they suffered adverse financial effects due to certain factors. Those include being quarantined, furloughed, laid off, given reduced hours , or unable to work because of child care needs due to the pandemic.)
Early Withdrawal Penalties
The law waives the 10 percent early withdrawal penalties (if money is taken out before age 59-1/2). If you qualify, you have three years to replace what you took out or to pay income taxes on the amount.
However, we don’t suggest cashing money out of your retirement account except as a last resort, because you will lose long-term growth on this money.
In a furlough case, you might not need to do prompt repayment of any outstanding 401(k) loans. (If you leave your job under normal conditions and you are under 55, you should repay the loan in full by tax day the following year. Otherwise, that loan becomes a distribution, and you will pay a 10 percent early withdrawal penalty plus your ordinary income tax rate.)
Note: If you had a previous loan against your 401(k), the CARES Act does not apply to that loan.
Once your company furloughs you, look into filing for unemployment benefits right away. No time to waste!
The unemployment insurance system (UI) is a partnership of federal government and state programs. Created in 1935, the system takes in companies’ payments on behalf of workers so they have an income if they lose their jobs. States manage the basic UI program, but the U.S. Department of Labor oversees the system. States provide most of the funding and manage the benefit payments. Although states must follow federal requirements, they mostly set their own eligibility criteria and benefit levels.
See if your state offers an unemployment benefits calculator. (A simple Google search can show if one is available.) You will find two types of calculators — one tells you how much money you can collect and another tells you how many weeks you can collect payments.
Check with your state’s unemployment office to find out what eligibility requirements you have to meet. If you work part-time, you could receive benefits (even partial benefits) . Also, you might be eligible to collect unemployment while you receive other benefits from your current position. Getting paid for unused vacation time you accrued mostly does not affect your eligibility. However, you will not qualify for benefits if you continue to receive the full salary and benefits your employer paid while you were employed.
Length & Amount of Benefits
Standard unemployment insurance benefits — in most states — run for 26 weeks (plus one unpaid “waiting week”). For people who have not yet found a job within that time frame, Emergency Unemployment Compensation (EUC) and Extended Benefits (EB) offer extra payments. Each of these programs has a different deadline. Consequently, your number of eligible weeks depends on when you filed your original claim.
Your payment depends on your weekly earnings before being laid off, and the highest amount of benefits available varies by state. Unemployment benefits typically replace about half of your previous earnings, subject to a maximum level.
Benefit Caps and Averages
According to the Center on Budget and Policy Priorities, the average unemployment benefit nationwide reached $387 per week in February 2020. The highest state-provided weekly benefit ranges from $215 in Mississippi to $550 in Massachusetts. (Some states offer higher benefits to job seekers with dependents. Check your state benefit details to see if this is the case in your state.)
Because the benefit is subject to a cap, unemployment insurance benefits replace a smaller share of earnings for higher-wage workers than for lower-wage workers.
The permanent Extended Benefits (EB) program typically provides an extra 13 or 20 weeks of compensation to the unemployed who have used up their regular benefits in states where the unemployment situation has gotten much worse.
COVID-19 Unemployment Benefits
Here’s a job loss-job search tip related to the global virus situation that started early in 2020. You might qualify for unemployment benefits from the impact of the COVID-19 pandemic if one or more of these apply:
- Employer closure
- Reduced hours
- Quarantine–you or someone in your household
- “High risk” (older adults and/or persons with serious chronic medical conditions)–you or someone you provide care to
- Lack of childcare due to the virus (i.e., your childcare closed)
You may not qualify if you quit your job because of worry about catching the virus at work. Check with your state’s unemployment office before quitting your job. Each state’s guidelines vary. For example, in Nebraska, you might still qualify for benefits if you have “good cause” to quit your job. The reasons could include (but not be limited to), work conditions, serious health issues, or escape from spousal abuse.
CARES Act Provisions
Note: If you stayed home because of fear about catching the virus, you might not be eligible for unemployment compensation. The CARES Act excludes you from collecting unemployment if you can work from home with pay. It also excludes those who currently receive paid or sick leave.
The CARES Act also provides “backup” unemployment compensation. The law provides emergency funding to states to provide an additional $600 a week in payments — on top of regular weekly payments. You must be eligible for at least $1 of underlying benefits for the claimed week — from the time you lost your job until July 31. This is part of the Federal Pandemic Unemployment Compensation (FPUC) benefits. The Act also funds another 13 weeks of benefits for states, which typically cap unemployment benefits between 12 and 30 weeks.
File your claim for benefits as soon as you can. You will need to request benefits every week you want a payment, even if your application is still pending initial approval. File your claim weekly during your furlough.
Waiting Periods & Other Requirements
Many states have a one-week “waiting period” before claims become eligible. (Georgia, Iowa, Maryland, Michigan, Nevada, New Jersey, Vermont, and Wyoming don’t have a “waiting week.”) At least 35 other states have waived the waiting period for virus-related unemployment claims, allowing immediate eligibility for benefits .
In addition, at least 27 states have waived the active work search requirement to be eligible for unemployment compensation.
Although many claims are paid within a few business days, it could take 2-3 weeks for your first check to arrive. Moreover, these days payment of most claims occurs through direct deposit to your account or to a prepaid debit card, instead of a physical check.
How You Qualify
Normally, the unemployment insurance program provides benefits to people who:
- Have enough employment to establish a claim;
- Lost employment through no fault of their own;
- Are ready, willing, and able to work; and
- Actively look for work.
However, as mentioned above, many states have waived the active work search requirement.
You might get excused if you can’t work due to the pandemic. You just have to stay in contact with your employer and be able to return to work when asked. That satisfies the “work search, availability, and capability” requirements. If your current unemployment is not due to the pandemic, you still need to conduct a weekly work search. However, you don’t need to accept work offers if under quarantine or instructed to stay at home. The same goes for being under a statewide stay-at-home order.
Job Loss Tips for Tax “Gotchas”
One thing you might not realize is that unemployment benefits count as taxable income on your federal tax return. The payments might or might not be taxable in your state. Check with your state’s Department of Labor for information. Most state unemployment applications allow you to choose to have state and/or federal income tax withheld from your payments. Make sure you set aside part of the money for taxes if you don’t have taxes withheld.
You might need to make quarterly estimated tax payments if you don’t have taxes withheld from your benefit payments. Check with your tax advisor about this.
Other Assistance–SNAP; Health Care
Your new situation might make you eligible for other kinds of help. For example, under the Supplemental Nutrition Assistance Program (SNAP), states issue “food stamps” based on need. Each state has a different application form and process, so contact your state agency directly to apply. During the current emergency, some regulations are being relaxed or suspended. This makes more people eligible for the benefit.
Health Care Coverage
Does your company pay your health care premiums while you’re unemployed? If not, and if it has more than 20 employees, you might qualify for COBRA benefits. However, you will need to pay this premium yourself. The cost of the COBRA premium might be higher than short-term insurance you can obtain for yourself.
If you have an existing health issue, keep your group plan in force until you can arrange gap coverage. Check with your employer’s HR department to ensure you can get back on the group plan when work restarts.
COBRA premiums might prove too costly; in that case, look into short-term health insurance. One source of options is ehealthinsurance.com. You could also obtain a private plan through enrollment on an Affordable Care Act (ACA) health care exchange. If you can’t get your employer’s insurance, you might qualify on an exchange during a Special Enrollment Period. Check your eligibility and options on Healthcare.gov or your state’s health insurance marketplace. Depending on your income, you could also qualify for free or low-cost coverage under Medicaid. (The Healthcare.gov site provides information about this option as well.)
Time for a Change?
Just a few more job loss tips to move you forward–as a business owner:
You might also take this chance to change directions with your career. Because CARES Act provisions don’t require you to actively seek work, you could spend some time starting your own business.
The Middle Class Tax Relief and Job Act (2012) authorized $35 million to encourage states to promote Self-Employment Assistance (SEA) programs. SEA entitles unemployed people to claim jobless benefits while at the same time gaining access to small business development help. Individuals with a viable business plan can receive unemployment benefits as long as they work full-time on the launch/start-up.
Under this program, people receive aid equal to their unemployment insurance benefits for up to 26 weeks. During that time, they can access training and other resources to help launch a business.
However, you don’t qualify for extended benefits if you enroll in the SEA program. Furthermore, you might not qualify to receive the $600/week in federal assistance. Check with your state’s Department of Labor to see if they offer a SEA program. (As of March 2020, Delaware, Mississippi, New Hampshire, New York, and Oregon have active Self-Employment Assistance programs.)
Take advantage of the programs available to you. Many of these receive state and federal funds. This isn’t charity. Your tax dollars pay for these programs, and they aim to get you back to work again.
What to Do Now
Without a job to go to every day, your days may seem endless. On the other hand, now you can tackle projects you’ve put off because you’ve been too busy with work.
Think about where you want your career to be one year from now and five years from now. Take steps to move closer to these goals.
Focus on personal development. Can you acquire new or stronger skills? You can find sources to take online classes for free. For example, the eight Ivy League universities now offer hundreds of online courses to the public at no charge. Many other course platforms also provide courses online for free or low cost.
With many free courses, you can also get certified for a fee and add it to your resume.
Get Help from Experts and Others
For instance, you can choose to work with your resume writer to update key documents. That includes your resume, LinkedIn profile, and other career or job search tools. Now might be a great time to gather information about your accomplishments. When you’re back at work and the economy moves forward again, you can look for a better job if you choose.
Seek support from others during this time. Authorities might limit in-person meetings, but you can use technology like Zoom to connect with friends, family, and colleagues.
Be sure to take care of yourself during this time. Eat right. Try to get at least some exercise each day. Get plenty of sleep. Access programs and services available to you, so you can ensure you’re prepared for what’s next.