What to do when you suddenly find yourself unemployed

On April 9, the Department of Labor announced that 6.6 million Americans filed for unemployment benefits for the first time the previous week. In the two weeks prior, about 10 million workers did so. It’s an unprecedented surge of joblessness caused by the COVID-19 pandemic shutting down much of the U.S. economy. And it may get worse before it gets better.

Some workers have dealt with unemployment before. Others are dealing with it for the first time in their professional careers. What they all have in common is that nobody alive has ever dealt with being out of work at a time such as this.

But despite the current situation, there are actions you can take when you suddenly find yourself unemployed.

File for unemployment

If your job is eliminated or you’re laid off through no fault of your own, you are likely eligible for unemployment benefits. Your state’s labor department provides a weekly benefit based on a percentage of your previous income, up to a maximum amount. There are usually eligibility requirements that vary by state, such as actively looking for work while you’re unemployed.

In addition, the recently enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act has expanded these benefits. The benefit amount has been raised as has the maximum number of weeks you can collect unemployment. In addition, self-employed workers and gig workers adversely affected by COVID-19 can receive unemployment benefits.

Keep in mind that unemployment benefits are not available if you voluntarily quit a job or are terminated for cause or performance. It’s designed to help workers who lost a job through no fault of their own due to economic or company reasons.

You should apply for unemployment benefits as soon as possible. That’s especially true given the recent influx of unemployment claims due to COVID-19. State unemployment offices are overrun with new claims and applications, so the process will take longer. Using your state’s online application will speed the process.

Even if you’re not sure you qualify for unemployment, apply anyway. It costs nothing and the worst that happens is they deny your claim. And if that happens, there is usually an appeal process.

If you live and work in different states, make sure you apply in the state where your job was located.

Evaluate your job prospects

It might be tempting to take a few days or weeks to relax, but it’s important to start your job search immediately. This is especially true when fewer jobs may be available in many fields. If you suddenly find yourself unemployed:

• Update your resume, focusing on specific accomplishments that will help you stand out in a crowded field of applicants.
• Tell your social network about your situation, especially LinkedIn. (Here's what to put as your LinkedIn headline when unemployed.)
• Check out the appropriate online job boards and sign up for email alerts when new positions are posted.
• Enlist the help of a recruiter or career counselor to help with your resume and other job search activities if it makes sense financially.
• Consider multiple options: A new career that utilizes your existing skills, a new geographic location, starting your own business, or getting into professional teaching.
• Use any downtime to improve your situation: Read books, blogs, and trade publications; do volunteer work, or take classes/certifications to improve your skillset.

One way to subsist during unemployment is to find income sources any way you can. These probably won’t replace all of your lost income. But you’ll be amazed at how well even small amounts of money can stretch.

In addition to continuing a search for full-time, permanent employment, consider one of these options to get by:

• Part-time work
• Contract/temporary work
• Seasonal employment
• Gig work/side hustles: The gig economy refers to doing small service jobs and getting paid by the hour or by the project. Examples include driving or delivering for Uber or Lyft, blockchain architecture, fitness training, and computer repair.
• Freelance work: Companies have had to downsize to save money. That doesn’t mean the work those laid-off employees performed went away. To fill the gap, firms will look to outsource much of their day-to-day tasks. Similar to gig work, freelance work enables you to not only earn income, but also by keeping your skills sharp, add experience, and build a network. A few examples of popular freelance jobs include:
  • IT development
  • IT consulting
  • Software development
  • Marketing (e.g. social media)
  • SEO and PPC specialists
  • Public relations
  • Writing (e.g. blog content)
  • Website development
  • Graphic design
  • Videography
  • Accounting
  • Virtual assistants
  • Customer service
  • Transcribing

Keep in mind that earning income may affect your unemployment benefits.

[ Read: 10 practical side hustle ideas to make extra money in 2020 ]

Review your financial situation

Hopefully, you’ve managed to build an emergency fund that will help you through a period of unemployment. In addition, you may have severance pay and/or unused vacation days to help you get by.

Whether or not you have savings to fall back on, a temporary break in your income stream means you should curtail unnecessary spending. Make whatever money you have last as long as possible.

You may have to do without morning coffee runs, eating out, the fitness center membership, and streaming services until you start earning paychecks again. With the exception of streaming services, the impact of social distancing will likely make these easier to ditch than you think.

Buy only the necessities when shopping for food and household items. Minimize driving to reduce gas usage and try to lower utility bills by using less.

Also, check with your lenders and creditors to see if you can defer payments during your period of unemployment.

Review your insurance, too

Losing your job also meant forfeiting your company insurance benefits. These include your health, life, and disability coverage.

You can continue coverage on your employer’s health insurance plan for 18 months or more through COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act. This law provides eligible employees and their dependents the option of continued health insurance coverage if they lose their job.

However, your former employer will likely not pay their share of premiums as they did when you worked there. You will be responsible for the full premium amount under COBRA. This will raise your cost at a time when you may have trouble affording health insurance.

Other options for health insurance include:

• Using your partner’s coverage through their job
• Selecting from federal health insurance plans
• Check if you qualify for state Medicaid coverage

For group life insurance and disability coverage, many employers enable you to continue those policies on an individual basis. You will have to pay the full premium amount with an employer subsidy. In some cases, you may also be required to go through underwriting.

If you don’t have your own individual policies, strongly consider adding those coverages as your finances allow. You can add an individual term life insurance policy now, but applying for individual disability insurance will have to wait until you are back to working 30+ hours per week.

While dealing with insurance is anything but desirable, it's important to take these steps immediately. That way, unemployment will not eliminate your insurance coverage while you work diligently to get back to work.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.