Amidst the COVID-19 pandemic job loss has skyrocketed throughout the country. With countless industries being devastated by the pandemic, chances are you know someone that has lost their job or been furloughed. Maybe you even are that someone. Well, you’re not alone. But aside from applying for unemployment benefits, what else can you do to get your finances in order? Here are five tips that may help your financial situation during these trying times:
Extend your health benefits
Your health should be your top priority – especially since we are still in the middle of a pandemic. If you are able, negotiate with your employer and try to extend your health benefits for as long as possible. If you worked at a company with more than 20 employees, one option is to opt into COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage, which allows you to keep your health insurance for up to 36 months. This must be done within 60 days of being laid-off, so don’t wait!
Additionally, if you had a healthcare plan through the Affordable Care Act (ACA), you can go to HealthCare.gov to update your income information, which may qualify you for a subsidy. For any other situation, or to better understand your options, HealthCare.gov has a COVID-19 page with tons of information to get you started.
Reassess your budget
Take the time to sit down and look at your budget, especially if you’re not sure how long you’ll be without work. Cut back on unnecessary expenses, trim subscriptions, and, if possible, refinance loans. Mortgage rates hit an all-time low (3.15%) last month, and continue to be historically low. If you’ve considered refinancing your mortgage, now may be a great time to do it.
Even more, think about pausing some bill payments, such as student loans, auto loans, and credit card debt. There are many companies throughout the US that are making it easier for Americans to pause bill payments if they’ve been impacted by COVID-19. To find out if you’re eligible just call your provider, or check online.
Keep retirement in mind
Even though you may be without a job, it could still be possible to make decisions to benefit your future retirement. Most importantly, don’t forget about any money you’ve contributed to a 401(k) through your employer. If you leaving money sitting in your account, there’s a chance you could end up paying management fees for a 401(k) you aren’t contributing to anymore.
Remember, cashing out your 401(k) early is not generally encouraged because you will end up paying taxes and penalties. However, because of the current climate, the CARES Act has made it easier to withdraw up to $100,000 from your 401(k) without tax or penalty, if you need to.
In the most ideal situation though, we would recommend leaving your 401(k) alone and tapping into emergency savings first, and, if you can, and roll your 401(k) into an IRA. This way you can continue to save and even invest, regardless of where you work in the future.
Review your insurance policies
If your company was one that provided life insurance or disability insurance, there is a chance you may have lost access to those plans once you were laid off. The decision to either pick up insurance on your own or wait until you’re working again is completely dependent on your situation. Typically, term life insurance can be as little as $20 per month. If you can afford it, it may be beneficial to enroll to protect your income and any dependents who rely on it.
Find part time work
Although it might be difficult to find something full-time, look to supplement your income with a part-time or freelance gig. Many businesses are operating remotely, so extend your job search outside of your area. And don’t forget about startups! They can help you build out your resume in the interim.
All in all, we understand losing a job – even if temporarily – can throw a huge wrench in anyone’s financial plan, especially during a global pandemic. If you’d like a second opinion or are seeking additional advice on how to move forward, please reach out to us here at Egan Wealth Advisors.