Family, Kids & Relationships

Financial Steps To Take If You’ve Lost Your Income Due to COVID-19

Pinterest LinkedIn Tumblr

This article was adapted and reprinted with permission from Michigan State University Extension, Michigan State University’s statewide outreach organization.

More than 50 million jobless workers in the United States have filed for unemployment due to COVID-19, the infectious disease caused by novel coronavirus. For some, this is the first time they’re dealing with unexpected unemployment. When it comes to financial fears, paying for daily living expenses and debt often tops the list of anxieties. Debt is often another major stress point in households, whether dealing with credit card debt, student loan debt, or concerns about losing a home or car. To soothe some of the worry and anxieties, experts recommend focusing on things you can control.

First, determine the amount of money you will have at the beginning of your unemployment. Will you receive severance pay or pay for unused sick or vacation time? Have you acquired any savings? Will you receive a stimulus check from the federal government and if yes, how much? In other words, identify any income and assets and add them up.

Next, review your expenses. What is the minimum amount needed to survive? This is the time to scrutinize all expenses. Decide what can be eliminated, replaced or reduced. If you have federal student loans, those payments have been suspended until September 30, 2020. Prioritizing your bills is extremely important. Your top goals should be keeping a roof over your head, food on the table, functioning utilities, and prescription medication.

Will you be eligible to receive unemployment benefits (including up to $600 per week federal in addition to the state amount) and food benefits? There may be programs to help pay utilities, mortgage, childcare, and prescriptions. Call 211 or check with your unemployment office to find resources that will help you.

Don’t forget to factor in health care. You have a few options from which to decide:

Another important task is to contact your creditors. You should contact them as soon as possible, especially if you are concerned about continuing to make your payments. They are usually willing to work out a payment plan. It is critical that you follow through with the new plan once you have committed to it. Contact a certified Housing Counseling Agency, if you suspect that you will not be able to sustain your mortgage payments. 

This is also an opportune time to obtain a free copy of your credit report. This will give you a clear picture of who your creditors are and give you a chance to clean up any inaccuracies.

A crisis is, by definition, a very troubling time, and many are tempted to avoid thinking about the impact it’s having on their lives. Financial strains can feel particularly hopeless when a family’s income has been cut off, with no end in sight. But there is hope—you can control and reduce the stress of a financial crunch by being proactive and following these steps as you assess your situation and make a plan to move forward. 

ParentsTogether is a 501 (c)3 nonprofit community of over 3 million parents, caregivers, and advocates working together to make the world a better place for all children and families.