The near future for the unemployed (and how they can survive financially)

Well, Congress put off dealing with yet another problem until the last minute. And a lot of Americans will likely suffer as a result.

Even optimistic people are saying that a bill can’t be passed before the federal unemployment bonus officially expires. (Technically, the last payments were made on the 25th, so it’s done in all but name.) In fact, there’s a question of whether the two parties can reach a compromise at all before the current session is over.

If they can’t then hopefully an emergency session is called, and they’re not allowed to take a break until something is hashed out.

What we’re (probably) looking at

The current Republican proposal would cut the federal unemployment bonus to $200 a week for two months. Thereafter, federal benefits would be 70% of the person’s previous salary through the end of the year.

The good news for many is that both parties are amenable to another $1,200-per-person check. The bad news is that it took up to three months for some people to receive the last one. So some people may not get it in time to cover their bills. And with a median one-bedroom apartment rent in the U.S. of $1,078 in 2019 and the average mortgage this year being $1,100, that check won’t stretch far even when it does arrive.

Allegedly, the federal eviction moratorium will be extended — or more correctly, reinstated since the government let the last one elapse. But we haven’t been told the details or given a time frame.

Little to no savings as backup

There are, of course, some people who are doing okay for now because they were able to put aside money in less lean times. But even then, savings will only last so long. Last year, the median savings balance (among people who actually had one) was $7,000.

Don’t forget, “median” means half of the respondents had less than that amount. In fact, 69% of respondents in a GoBankingRates survey had less than $1,000 and 45% of them had no savings at all.

Whether you want to blame consumerism or pay inequality/stagnation for their predicament, the fact remains that a lot of people will be in serious financial trouble. Even assuming that half of folks with no/low savings are still working, that would still be an awful lot of Americans struggling (and maybe failing) to pay their bills.

Making do with unemployment

It’s hard to say what the 70% will look like, since salary ranges so drastically in this country and it’s not clear what the median salary was for the currently unemployed. For minimum wage workers, it would be $203 a week. For the median wage earner ($957 a week), that would be $670. And of course, 50% of this country earns more than that. So I’m not quite sure how this is more palatable to Republicans than a flat $600 bonus. But that’s a diatribe for another day.

Since we can’t really predict the 70% bonus — and since we’re mainly concerned with the very immediate future — let’s just look at what the next two months’ bonus would bring.

With a national average weekly unemployment benefit of $378, the $200 weekly bonus would mean about $2,300 a person. In Arizona, a single person with a one-bedroom apartment would be getting $1,760, so they’d have $800-1,000 left over each month after rent was paid.

In other words, even with the high median rent in this country, there would probably be enough for most folks to make rent or their mortgage. Though it will be barely for those living in many major cities on the East and West Coasts. And of course, those places tend to be some of the most populous. So that’s a lot of people struggling to cover anything other than rent.

And of course, besides rent people have to pay utilities, groceries, car payments (which alone average $530 a month), cell phone plans, Internet and marketplace health insurance plans. Depending on their area’s cost of living, people may not be able to cover all or even most of those.

Also worth noting: After the $200 bonus ends, people may be in big trouble for months. The National Association of State Workforce Agencies says that it would take a minimum of eight weeks to transition to a sliding scale — and as many as 20 weeks.

So any gap between those initial two months and up to 20 weeks would see people living on the state benefits only. In Arizona it’s only $960 a month. You’re lucky to find a one-bedroom for $700 here.

In other words, it’s going to be dicey for a lot of people in the coming months. So if you’re facing financial crisis in the next few months, here’s what you can do.

Know your emergency budget

It’s important to know how much you need to stay afloat.

Hopefully, you’ve been winnowing down your spending these last few months, so you might already know it. But here’s how I calculated my emergency budget (and the post has some tips on ways to cut expenses).

If your unemployment benefits are above this emergency budget, try to sock away every spare dollar.

Know your credit limits

Anyone who’s unemployed and has credit cards needs to go online and check what their limits are. Banks have been shrinking some people’s lines of credit. If that’s happened recently, you can call your bank to see if you can get them to restore your previous limit.

Heck, even if your limit hasn’t been lowered, consider calling your bank to ask it to raise your limit. Because if you’re unemployed right now, you may need all the credit you can get.

I know, I know: Credit card debt is horribly suboptimal. But if unemployment income is barely going to cover basic bills — especially if it barely covers rent — you need to keep any cash you have/get for the things you can’t pay for with a credit card.

If that means putting everything other than rent on a card, so be it. Not being homeless needs to be most people’s number one priority. Of course, for some it’s less important because they have resources for other places to stay. But by and large, making rent should be their main focus.

Keeping as much cash on hand as possible means potentially breaking the other personal finance golden rule: Pay only the minimum amount due. Yes, the interest is soul-crushing. But so is having utilities shutoff or being out on the streets.

Know your housing options

Obviously, in the ideal situation, you have an understanding landlord who will work with you. Even if you don’t think your landlord is flexible, your first step is to contact them and explain your situation. See if you can set up a payment system until your financial situation improves.

But if that doesn’t work…

First of all, some landlords have been sending eviction notices in violation of the national (and, in many cases, state) moratoriums. It’s true that the federal moratorium has ended, but your state’s may still be in place.

So if you receive a pay or vacate notice, check with your state to see whether it’s legal. Even if your state’s eviction moratorium has ended (and if the federal one hasn’t been put back in place yet), you have some time.

First, go to your state’s Housing Authority website and find out what options you have. Unfortunately, most of the time, waiting lists are very long. Even if you’re made a priority, a vacancy has to open up. But your state may have emergency housing options, so be sure to check.

If that’s not an option, and if your family truly has nowhere else to go — friends, family or state housing — you gotta do what you gotta do. And that means staying put without paying rent.

Note: Again, please only do this if you have literally no other option besides homelessness. Your landlord may be relying on your rent to make their mortgage payment on the property. So you may be hurting someone else greatly with this move. And even if you don’t care about your landlord, if the process reaches the eviction stage, there will be a ding on your rental history, making it very difficult to find a place in the future.

So assuming you have no other options, here’s the deal: The landlord can’t kick you out immediately. They have to serve you with a 30-day pay or vacate notice. That gives you a month during which an eviction moratorium may be reinstated, and you’ll be safe.

Even if the moratorium isn’t restored, an eviction case still has to go to court. Even in the best of times, that can tack 30 to 60 days onto the process. So the process could be significantly longer as evictions flood the system.

And if the turnaround is somehow quicker than the government reissuing am eviction moratorium, you can try appealing the writ that the judge issues. You’d need to have a reason that would stand up in court. Or I guess you could just try appealing with a BS reason to see if you can delay longer.

If that doesn’t work or if you choose not to appeal, the landlord still has to get the sheriff’s department to forcibly remove you. You will be contacted and given a date by which you need to be out. Again, the number of evictions will be high, so your date may still be some time away.

Again, in an ideal world you and your landlord can work something out. Or you’ll have some other option, and you’ll take that because you don’t want to take advantage of your landlord.

But if you (especially if you have a family) are going to be homeless once you leave your current housing — especially since I’m guessing most homeless shelters are going to be overflowing (and a huge danger of spreading COVID) — I understand gaming the system.

Know your food options

While the federal unemployment bonus was in place, a lot of unemployed people wouldn’t have qualified for SNAP (aka food stamps). But without that, there’s a chance you can get help now.

You can find the income and asset limits here. But for a brief rundown:

• One person households can’t earn more than $1,354
• Two-person households can’t earn more than $1,832
• Three-person households can’t earn more than $2,311
• Four-person households can’t earn more than $2,790

So if you meet that criteria, apply immediately for SNAP. Technically you apply with the state, but if you’re having trouble navigating the state site to find the application then you can go to the SNAP website. This page will direct you to the application form.

It’s worth noting that currently SNAP has a time limit for able-bodied people without dependents: three months in a three-year period. The website says you are exempt in some cases, including “meeting work requirements for another program (TANF or unemployment compensation).” I assume this means that as long as you’re eligible for unemployment benefits, you’re eligible for SNAP. But I would check with the state to verify that.

It’s also important to take advantage of food banks, though they will likely be stretched somewhat thin in the coming days (if they aren’t already). Here’s where you can find a food bank near you.

Note: Anyone currently able to make charitable donations should strongly consider giving money to your local food bank or Feeding America. They’re gonna need it.

Know your utilities options

First of all, when the federal bonus runs out, your new reduced income may qualify you for the company’s assistance program. So you need to contact the utility company or its website to see what sort of help is offered.

If you don’t qualify for a reduced bill — or can’t pay even a lowered one — check with your state to see if it has a shutoff moratorium in place. Most states passed one at the start of the pandemic, but some states have allowed theirs to elapse.

If there’s no moratorium, check with your local city, county and state governments to see whether there are any local assistance programs. You can check with local charities (especially religious organizations, whether or not you’re a member), but most of them are stretched thin even when there isn’t mass unemployment.

Also check out the Low Income Home Energy Assistance Program (LIHEAP) to see what programs are available.

Know your insurance options

I know money may be tight, but a pandemic is no time to be uninsured. Medical bills account for a large number of bankruptcies in this country, and even a few days’ stay in the hospital will be thousands of dollars. And COVID cases serious enough to require hospitalization generally won’t be resolved in a few days.

So go to the marketplace website (losing coverage is a valid reason to sign up mid-year) and see how much you qualify for in subsidies. Coverage might be affordable if your income is low enough.

If circumstances change — such as restarting work — you’ll obviously need to report any changes in income, which will affect how much you pay. But if your income increases, you should be able to better afford a plan even with lower subsidies.

And if you can’t sign up for a marketplace plan because it’s been too long since you were laid off — or because you didn’t have health care to begin with — call some insurance brokers. At least get a catastrophic plan.

If you’re very low income, you may also qualify for Medicaid. So you can check that information through your state. Medicaid’s website has a list here of contacts for every state.

Use 211

If you dial 211 or go to the 211 website, you will be connected with an representative that will help you find resource programs — nationally and in your area — for free. This is through United Way Worldwide.

They will likely know about programs not listed above. Even if they give you a list of places to check out, it wouldn’t hurt to ask before hanging up, “Are there any other resources that could help someone like me?”

At worst, they’ll say no, that’s everything. At best, it may jog their memory about some program specifically for the descendants of pioneer Baptists ministers* that they forgot to consider.

How’s everyone doing right now? If you’re on unemployment, what will the lowered bonus mean for you?

*That’s an actual scholarship my high school physics professor found in college. (And it wasn’t even grade-dependent.) So you never know what kinds of esoteric assistance programs may be out there too.