Federal unemployment benefits under the CARES Act, a $600-per-week lifeline for millions of Americans, expired Friday, July 31.
Having passed the deadline, Congress has not agreed on what to replace the benefit with, if anything. The latest proposal being discussed is a $1 trillion package by Senate Republicans called the HEALS Act, which would extend federal benefits at a reduced $200 per week, send another round of $1,200 stimulus checks to qualifying Americans, and include more Paycheck Protection Program loans for small businesses, plus funds for schools. But the proposal is far from the $3 trillion HEROES Act passed by the House of Representatives in May, and Congressional leaders are still far from making a deal.
That leaves millions of unemployment recipients, many of whom had no financial plan leading up to the Friday deadline, searching for a way to make ends meet.
What You Need to Know
The $600 per week benefit under the CARES Act, which is in addition to any state unemployment benefits, ended July 31 — but you may have received your final payout as early as July 25, depending on when your state processes unemployment insurance.
Although you’ll no longer receive the additional funds, you can still get state unemployment insurance, if eligible. But prepare to see a significant drop in your next check.
State unemployment insurance is typically based on a percentage of your lost wages. Weekly state benefits average $382 nationally, according to the Department of Labor, but some states cap weekly maximums as low as $240 or $275.
Get familiar with your unemployment insurance timeline, too.
Under the CARES Act, Pandemic Emergency Unemployment Compensation (PEUC) guarantees up to 13 weeks of additional unemployment benefits once you’ve exhausted state benefits. On average, states offer 26 weeks of unemployment insurance, setting the new cap for many recipients at 39 weeks.
State benefit time limits can differ, though. For example, some states, like North Carolina and Florida, currently cap regular unemployment insurance as low as 12 weeks. Unemployed workers in those states who applied for benefits at the beginning of the pandemic may be approaching the cap for regular and PEUC benefits, but you may still be eligible for additional weeks of Extended Benefits depending on your state’s current unemployment rate.
Keep track of your benefits and your state’s unemployment site closely; you may need to apply for the additional weeks of federal benefits after you’ve exhausted state benefits.
With Congress still far from making a deal on a second stimulus, the best thing you can do right now is plan, and take action. Look into all potential options for employment and any assistance available to you, streamline your budget, and continue to check your benefits status for any federal- or state-level changes.
How to Prepare
With no agreement in sight, and possible delays in the payment of any additional benefits, it could be weeks before recipients see aid from any legislation.
Set yourself up to best weather the storm until more relief comes, or you’re able to return to work, by developing a plan.
Revisit Your Budget
You likely already found areas to curb your spending at the start of the pandemic— dining out, subscription services, transportation, etc.—but now is a time to trim your budget further. Cut back any non-essentials you can do without until your income is more stable.
Start thinking of options to lower your largest monthly payments. Is there a way to reduce or eliminate your car payment? Would you consider taking on roommates or moving to reduce housing costs? The changes may only need to be temporary, but starting with the costs that affect your budget most can make the biggest impact when facing lost income.
And over the short term, plan for how you’ll meet your basic needs.
Contact your state’s unemployment agency to determine how much you can expect your new unemployment benefits to total, then budget that money for necessities: groceries, rent or mortgage, utilities, and other necessary payments. If you’re worried about getting food on the table, look into food assistance programs and federal SNAP benefits.
Credit card companies, loan servicers, mortgage lenders, and banks across the country have implemented hardship assistance and forbearance programs for customers facing financial hardship due to the COVID-19 pandemic.
It’s never too late to ask for assistance from any company you are financially obligated to, says Lauryn Williams, CFP, founder of Worth Winning, a financial planning firm in Dallas.
“If you did not take advantage of hardship opportunities previously because you were able to fill the income gap and the additional unemployment assistance has been helping you do that, it’s okay to reach out and say that you need additional help.”
Start with the bills that affect your budget the most. For homeowners facing unemployment, contact your mortgage lender about forbearance options. If you’re a renter, keep your landlord informed about your situation and look into rent-relief resources from federal to local levels.
Use Your Emergency Fund
Now is the time to break the glass and use your emergency savings fund, if you have one.
It’s okay to dip into your savings for periods of extended income loss and uncertainty. Be smart about how you choose to use the money, but if you have an emergency fund saved, it can be a great asset.
As you’re able, continue contributing back into your emergency savings, or begin building a small safety net if you don’t already have one. Even a few dollars from whatever income you have coming in can build up over time and provide more security for future financial hardship.
Under the CARES Act, you can also take distributions from your retirement savings early, without incurring the typical taxes and fees. Experts see this as a last resort, but if you’ve exhausted your other options and have money available in a retirement fund, it may be better than taking on debt or falling behind on necessary payments.
Ask for Help
Seek out assistance from community members and organizations, such as local food banks, charities, and nonprofit centers.
Also reach out to friends, family, and members of your network for any leads on ways to earn some income.
“Don’t be fearful of it; it’s very practical,” says Robert Eddy, a financial planner for Prudential based in Lafayette, Louisiana. “Think of any friend or family member or business acquaintance you know that has practical financial or business experience. I’ve found most everybody very generous with their time and advice these days.”
Over the next few weeks and months, become familiar with assistance programs and aid at federal, state, and local levels. Then become your own best advocate.
Follow up with any leads or job prospects. If you have difficulty receiving your unemployment insurance or you have questions about your benefits, call your state’s unemployment office—even if it takes multiple calls, stay diligent. Apply for any assistance programs or grants you qualify for, and don’t be afraid to call and ask whether you do qualify. Continue to put away any money that you can into your savings each time you receive a check in the mail.
Create a realistic action plan for the coming weeks and months based on your reduced state benefits as you continue to seek other sources of income. A second stimulus may be coming, but until you know the details you should prepare for any scenario.