I recently lost my job when my company did some pretty significant layoffs in an attempt to protect their survival through the COVID-19 quarantine. I did get a small severance, but I’ve never been through something like this before—I’ve always had a job. What advice would you give to those who are determined to recover from a COVID-19 layoff? — Recovering from a Pandemic Layoff
First, let me say I’m sorry you’re in this position and you are not alone. These are unprecedented times and we are all struggling to sort through the chaos together. That said, the most important and impactful thing you can do is to focus on what you can control and try your best not to panic.
Protect Your Assets
To begin with, you’ll want to make sure you’re protecting the assets you already have. In times of uncertainty, we often look for help from wherever we can find it. However, in times of crisis, scammers of all different kinds tend to emerge. Be wary of those selling cures or testing kits. Don’t click or respond to texts or emails about a check from the government and verify contact information with reputable sources before you send donations or provide any financial information. Remember, authentic Frost employees will never ask you for sensitive information on the phone.
Review your budget to identify your nonessential spending. Many of our usual outlets for excess spending have been temporarily removed for us, but you might be able to limit how often you get takeout, stop unnecessary online shopping and generally look for ways to free up cash. Then, funnel anything you can to an emergency savings fund (including any government relief money or tax refunds). The rule of thumb for emergency savings is to have three to six months of expenses saved. In this instance, if you haven’t already started, every little bit will help. And if you already have an emergency fund, this is the time to use it!
It’s important not to compromise your long-term plan in the face of this short-term obstacle.
Depending on your situation, applying for unemployment benefits might be a smart option for you. The government has made changes to benefits and is allowing more flexibility with granting benefits during this time of crisis. If you were working in Texas, you can get more details on benefits and applications on the Texas Workforce Commission’s site.
Contact Creditors and Lenders
Learn about what relief they can offer as a result of the crisis now—don’t wait until you start missing payments so you can avoid negative credit bureau reporting. With the Federal Reserve dramatically cutting rates, find out if refinancing a mortgage or other debt at a lower rate is possible. Plus, you can rest assured that most utilities (electricity, phone, gas, etc.) won’t terminate services during a crisis. (Though it is worth a phone call to your provider to be sure you don’t need to enroll in any relief programs.)
If you find yourself in a position where you need to borrow money to cover the necessities, there are some responsible ways to handle it. First, stay away from payday loans or any other offers that come with high interest rates or unclear timelines. Instead, consider personal loans or a personal line of credit. Both of these options are flexible, come with no prepayment penalties and are available at competitive rates.
Think Long Term
This is a good time to review your investments and focus on the long-term strategy—even during a time when the short-term may be all you can think about—unless you are retiring within the next five years. It’s important not to compromise your long-term plan in the face of this short-term obstacle. This will end! And until it does, stay calm, stay smart and stay safe.
We’re Here to Help
Visit with a Frost banker for more immediate guidance on your financial life.
Give us a call at (800) 513-7678