Updated: Aug 12, 2020
Whether your income is stable, you’ve lost your job or had your hours cut due to the COVID-19 crisis, you may have questions about how to manage money during this unstable time in our world. To help you along the way, we have put together some common questions and answers about what you should do to manage money well during a crisis:
What should I do if my income is stable?
Pay your bills on time
Make sure you have an emergency fund set aside
Keep paying off debt as fast as you can after your emergency fund is set
Use your stimulus money to accomplish your financial goals
What should I do if I lost my job or my pay was cut?
Temporarily stop paying off debt; just make the minimum payments if you can
Be sure to pay for your critical living needs first: food, shelter and transportation – in that order
Cut all unnecessary spending
Take advantage of local community programs that offer food and rent assistance
Let your bank and utilities know what is going on and ask what kind of relief programs they can offer
Look for a temporary job to get by right away (try an online or remote customer service job)
Use stimulus money to pay for essential needs (food/shelter) and save the rest
Save as much cash as you can with any remaining income you have
Should I file for unemployment?
This depends on your current earning potential. Unemployment only pays a percentage of your income up to $512 a week so if you need more than that to stay afloat, finding a job is a much better option. Here is a link for more details: https://www.nolo.com/legal-encyclopedia/collecting-unemployment-benefits-texas-32500.html
Should I cash out my 401(k) or retirement account?
If at all possible, don’t take your 401(k)/retirement money out of the market unless you are facing a foreclosure or bankruptcy; early withdrawals are fined and taxed heavily by the government and you will lose much of the account’s value. However, if you have lost your job due to COVID, the normal 10 percent penalty is being waived. However, you will still owe taxes on it so that could be painful at tax time next year.
Should I take out a loan to survive?
Before you take out a loan, be sure to look for another job and/or file for unemployment first. You may also be able to sell some things or get creative and start a business to get by for a while.
If a loan is the only option, do not take out a pay-day loan due to the very high interest they charge
Avoid taking out a home equity loan because it could jeopardize your long-term equity and put you deeper in debt
Do I have to go back to work if my employer asks me to?
Unless you meet certain criteria, you must go back to work if offered a job. To learn which criteria are exempt, visit this website: https://www.twc.texas.gov/news/frequently-asked-questions-about-unemployment-insurance-benefits-related-covid-19
Should I wait for my old job to start back up or try to find a new job?
Keep looking for work even if you are getting unemployment; some industries may take a while to get back to normal so grab another good job while you can
Focus on finding a job in industries that are thriving or essential during this crisis (grocery store, delivery, online customer service and technology companies)