If you find yourself unemployed due to COVID, you may be wondering what you can do to help your finances.
Whether you are facing a temporary furlough or a permanent layoff, it is likely your cash flow is taking a major hit.
The good news is that even if you are unemployed due to COVID, there are ways to increase your cash flow. This includes taking advantage of some of the aggressive relief the government has provided in response to COVID as well as non-government actions.
Cash flow is about two things: the money coming in and the money going out.
We’ll start by talking about government benefits in response to COVID, such as unemployment benefits which will help replace some of your lost income. Then we’ll go through options to decrease your expenses and finally go over pro-active ways you can create a little extra income.
Take Advantage of Government COVID Benefits
Unemployment Benefits. If you’ve been furloughed, laid off, or are facing reduced hours at work, you may be eligible for unemployment benefits.
To better understand what your state offers for unemployment benefits, read our article about COVID unemployment benefits. This article includes a spreadsheet we’ve created that will point you to your state’s unemployment website and give you an idea of how much you can expect to receive.
The federal government is also providing an additional $600 per week. This move was directly in response to COVID and the benefit runs through end of July. Depending on the state of the economy at that point, there may be some form of an extension.
Your state unemployment and federal benefit may not replace the entire paycheck you were receiving, but it could come close. The federal benefit is large enough that some people are receiving more through unemployment benefits than they would be if they were working.
Stimulus Checks. The first stimulus check is $1,200 per eligible adult and $500 per eligible dependent has nothing to do with whether you are employed or unemployed. This may not sustain your finances for months, but it is certainly better than nothing. We’ve been tracking closely whether there will be a second stimulus check.
Student loans. All federal student loan payments are paused through September 30th, 2020. No interest will build on these loans and each month will still count towards loan forgiveness programs. This is a huge benefit that should immediately create cash flow for student loan borrowers.
Decrease Expenses
Besides applying for unemployment benefits, one immediate way you can increase your cash flow is limiting the amount going out the door. Some of these actions will only be short-term fixes, but we are also assuming you won’t be unemployed long-term.
Being unemployed is never ideal, but being unemployed during COVID is better than other times; the extra $600 a week in federal unemployment benefits already proved that. But the additional benefit is that businesses are feeling a ton of pressure to take care of customers, creating opportunities to temporarily stop or limit payments.
Speak to lenders. If you’re struggling to pay your mortgage or rent, credit card payments, student loans, or car insurance, it’s a good idea to see if you can temporarily pause or lower these bills.
Do not simply stop paying. Make sure you give your lender a call! If you do not speak with them prior, you are likely to still incur late fees, interest, and your credit could take a big hit.
Call your lender and explain that you are facing financial hardship due to COVID. Ask what they can do to help. Once you come to an agreement, ask that they provide the agreement to you in writing to confirm. That way, you always have proof of your agreement in case something goes awry.
Some companies are taking more formal approaches. For example, private student loan lenders like SoFi are offering two-month forbearance which you can apply for by filling out a simple form on their website. They also are offering an additional month at the end of the two-month period, if you need it. Other private student loan lenders are taking similar action, some more or less generous.
There have been countless announcements from mortgage lenders, credit card companies, and others who have made it clear they are willing to work with their customers. Remember, while you are unemployed the best thing you can do is shore up cash. It’s worth at least asking what companies are willing to do for you.
There are also some other benefits that are automatic regardless of employment status, such as auto insurance. People are driving less, so there are naturally far fewer accidents. Auto insurers are automatically giving billions back to customers in the form of premium discounts.
Review all expenses. This is a good thing to do regularly regardless of whether you are employed or unemployed, but it should become a priority when you are unemployed. Look at all of your spending with a critical eye. Are there areas of spending you can reduce, or even eliminate, completely?
Maybe you want to keep your Netflix account now that you have more time on your hands. But you could drastically lower your clothing and social budget. Scrutinizing your budget can surprisingly do a lot to help your cash flow.
Opportunities to Bring In More Money
We started by talking about government benefits and cutting expenses because those are the most clear and quick ways to increase your cash flow. Now we’ll take a look at opportunities to have more cash coming into your bank account.
An Important Note. Before you dive head first into a side hustle, check with your state. Earning money through a side hustle may affect the amount you receive for unemployment. While this isn’t necessarily bad, it can certainly put a damper on your finances if you aren’t prepared for it.
Continue Job Searching. If you were permanently laid off, obviously you will want to continue job searching.
While the job market is certainly in a unique situation right now, don’t let that deter you from applying to new jobs. You truly never know who has a desperate hiring need right now.
If you’ve been job searching, but with no luck, don’t beat yourself up. There is a lot of competition right now, and companies aren’t sure what their business outlook will look like for the rest of the year. Slowing down – or even stopping hiring – is one of the things companies do short-term to shore up their finances (just like how you will be looking to shore up yours). Keep trying and continue building your network. Sooner or later, the market will rebound and businesses will hire at a more rapid pace.
Sell Items from Your Home. There has literally never been a better time to clean out and declutter your home. But with consignment shops like Goodwill being closed for the time being, you may not have a place to actually get rid of all of the items you no longer need.
Fortunately, you can always sell home items on Facebook Marketplace and Craigslist. Plenty of people are still buying. Just be sure to use safe protocols, and sanitize everything as much as possible.
Start a Business. If you’ve ever dreamed of starting a business, now is the perfect time.
Some of the world’s most successful entrepreneurs started when the market was at it’s worst, so don’t be afraid to start!
And businesses don’t have to be expensive to start. Businesses like blogging may not earn you much money at first, but they cost very little to start. With consistency and time, your blog can grow into a successful business. Especially if you are drawing unemployment and may be out of work for a few months, this is a perfect time to pour time and effort into something you may have thought of doing but never gotten around to.
Consider Other Side Hustles. Side hustles can be a great way to increase your cash flow.
There are limitless ideas for side hustles – here are a few ideas to get you started.
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In this period daily’s business (drive school) is closed so we’re not earning, but you cannot ask a loan because you haven’t a salary, so you can ask for unemployed benefit and in the same time find way to have extra income (sell stuff, remote work, baby sitting)….
I think flipping items online is the best side hustle during this pandemic. People are stuck at home and they are spending money. I had my best month in eBay sales ever in April.
I’ve been following your eBay hustle – really impressive! Obviously you have a system down that is working really well. Might be a good idea for others to learn from you and start flipping things as well.