Financial steps to take if you lost income due to COVID-19
Examine your expenses, savings and find help available to you.
One million jobless workers in Michigan have filed for unemployment due to COVID-19, the infectious disease caused by novel coronavirus. For some of you, this is the first time you are dealing with unexpected unemployment. When it comes to financial fears, paying for daily living expenses and debt often tops the list of anxieties. Whether you have credit card debt, student loan debt, or worried about losing your home or car, debt is often a major stress point in households. To soothe some of your worry and anxieties, focus 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:
- Continue with the coverage offered by your employer via COBRA
- Go with a private insurer
- Investigate the Affordable Care Act Marketplace
- Research Medicaid coverage
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.
Navigating Money Challenges: Tools to Manage Finances through the COVID-19 Crisis is a new free webinar offered by Michigan State University Extension that dives into the proactive steps those who are recently unemployed or have reduced hours can take. Attendees will better understand the new federal CARES Act, making a budget, prioritizing bills, dealing with creditors, watching for scams, and will receive helpful links to many local, state and federal resources plus handy worksheets to assist with their decisions-making. Dates and times can be found at MI Money Health.
Be proactive and follow these steps as you assess your situation and make a plan to move forward. Michigan State University Extension offers money management and homeownership classes online. Visit the Events channel on MI Money Health for topics and registration links.
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