Qualifying For Unemployment Income
Unfortunately, some individuals who exit their jobs and think that unemployment will get them through until they find another job might discover they dont qualify for unemployment income. Each state sets its own qualifications and manages its program differently, but generally, you can count on at least the following three eligibility requirements:
Check All Your Options
It’s never easy to figure out how to survive unemployment. However, with a plan in place and when you know all your options, you have a better chance of figuring how to survive without a job â at least in the short term until you can find new employment.
If you lost your job due to COVID-19, check to see if you qualify for any benefits. Talk to your creditors about postponing your loan payments. Look for other ways to get money, such as a side hustle. And consider dipping into your retirement account and other funds. While it’s not fun to be unemployed, with the right budget and patience, you can hopefully be back in the workforce in no time.
So You Want to Learn About Investing?
Know What You’re Entitled To
When you lose your job, you may be entitled to final payments. Check your contract or ask your employer if you’re entitled to redundancy or retrenchment payments, or annual leave and long service payouts.
Use the Fair Work Ombudsman’s Notice and Redundancy Calculator to work out what you’re entitled to when your employment ends.
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How To Survive Financially While Unemployed
While you are unemployed, you need to readjust your priorities and goals. While you may want to thrive and do well with your finances , those arent realistic or practical goals. Focus on surviving financially while you are unemployed. This means mitigating the damage and trying not to get into situations where you will be fixing your financial problems for years to come. Focus on survival instead of thriving.
Allowable Contributions For A Spousal Ira: Tax
Keep in mind that your filing status can affect the level of allowable contributions. Letâs say Joe, 51, lost his job late in 2020 and hasnât been able to find full-time work during 2021, but wants to continue contributing toward his retirement. His spouse has taxable compensation of $50,000 for 2021.
If Joe and his wife filed separately, he would be unable to contribute any amount to an IRA for 2021 because he had no taxable compensation that year. If they filed separately and he had taxable earnings of only $2,000 for 2021, his IRA contribution would be limited to $2,000.
Dont Have Cash To Invest
If you dont have cash to invest, you may still be able to contribute to a retirement account.
If you have investments in a taxable investment account, you could sell them. Then, take that money and invest it in a retirement account.
There may be tax impacts on the sale of your investments. Consult a tax professional for details on what taxes you may have to pay.
Apply For Unemployment Benefits
Apply for unemployment benefits as soon as you’re laid off. These benefits are handled on a state level. Contact your state’s labor department to find out what the process is. The CARES Act authorized higher unemployment benefits temporarily during the pandemic. So, you may be able to get a higher amount each week than you would in normal times.
In some states, it’s taking a while to process the benefits. Have your unemployed budget in place and look for other ways to survive without a job while you wait for your benefits to start. Also, make sure you understand the requirements since there may be criteria that include actively looking for a job or doing volunteer work to receive benefits.
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Limit Your Fast Food Outings
Iknow this point sounds like a broken record, but lets get real, fast food isexpensive. Its always fun to try to recreate your favorite fast food meal athome and to see how much you save. Yes, the time it takes to cook at home canseem daunting compared to just driving down the street for afreshly prepared meal, but it will save you money and will usually be morehealthy since you control all of the ingredients.
Spend A Little On Home Repair
Now that you have more time on your hands, your standard excuse for not painting the fence, fixing the roof and doing something about that deathtrap you call a porch swing no longer applies. This may cost you a little at the hardware store, but there are good practical reasons for putting some time and money into DIY while youre waiting for employers to call you back.
If worse comes to worst, this will allow you to sell your house more easily. In the meantime, though, and especially once winter comes around, youll also save money every month by making your home more energy-efficient. If you have a yard, you can even channel your inner pioneer and take up gardening. While you wont save huge amounts on groceries, serving veggies you grew yourself is extremely satisfying and will most certainly taste better. Spinach, peas and carrots can all be eaten within a few weeks of planting.
There is a more important dimension to this, too. Losing your job, especially if you know you were good at it, can be very demoralizing. Doing something with your hands and seeing tangible results reminds you that youre still in control and will boost your confidence more than any number of pep talks.
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Final Words: An Example For The Future
Things may seem bleak right now. Still, remember that any mistake that doesnt actually kill you is also an opportunity to learn and grow.
Take a moment to think about how your situation wouldve been different if youd saved 10% of your income every month over the last year or even five. For one thing, your expenses would almost certainly be lower: youd have less left to pay on your car and home, and youd not be accustomed to the trappings of a lifestyle you cant really afford.
Saving just $10 a day perhaps by getting your coffee at home and taking a longer route instead of paying a bridge toll adds up very quickly. The table below assumes that these savings are compounded daily at 2% annual interest :
In other words, saving a little whenever you can makes a big difference when unemployment strikes. These small amounts really add up over the longer term, especially once compound interest starts to work its magic.
Get Your Spouses Help When Drawing Up Your Emergency Budget
It often seems like theres some kind of natural law that makes savers marry spenders, and vice versa. These differences in attitude can lead to tension even at the best of times. When money is tight, its essential for both of you to get on the same page, which generally means sitting down together and creating a budget you can both live with .
One of the main benefits of planning your spending instead of just winging it is that you realize just how small indulgences end up bleeding you dry. Since these are often paid in cash, try the following exercise if you dont already work from a household budget: write down your monthly take-home pay on the right side of a piece of paper, list your major bills on the left, then add all your unavoidable expenses to the left-hand column. Most likely, the two sides will not add up to the same number, and a large part of the difference will be due to impulse buying: stuff you dont really need, but have become used to buying without thinking about it.
As soon as you become aware of these leaks, you can start plugging them. There are a number of apps that will help you to track expenses you may be surprised at how small stuff like bottled water ends up draining your bank account.
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Best Ways To Save Money In Unemployment
Over 26 million Americans have filed for unemployment and more people are expected to file for benefits as businesses remain shuttered due to the coronavirus pandemic.
As people wait for their federal stimulus checks and unemployment funds to arrive and companies to reopen, saving money remains a top priority.
Here are the 14 best ways to save money while you are unemployed.
Cut Back Where Possible
Reducing your spending and expenses goes hand-in-hand with keeping track of them. Once you review your expenses and see how youre spending money, decide where you can or need to reduce spending. It could be that youre buying many convenience foods at the store or that you buy a lot of fresh produce only to have it spoil before you eat it. Cutting back on either will help you reduce your spending and minimize food waste.
You can also make cuts to spending in other ways. One option is to combine your shopping trips or errands to use less gas, reducing your fuel and transportation costs. Carpooling with coworkers is another way to reduce commuting and transportation expenses. Turning your thermostat up or down a few degrees, depending on the season, will help you reduce your home energy use, saving money on your utilities.
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Enter The Gig Economy
Finding full-time work can be a full-time job, and it could take months to find a new position. There are many steps you can take. It helps to assess your career goals and think about whether you want to change industries. If so, do you need to learn new skills? Youll also want to update your resume and profile on professional social media platforms, do some market research and reach out to contacts in your network. Until you can land the job thats right for you, consider part-time or gig work to help bridge the gap. Theres a variety of side jobs, from delivering food or picking up a retail shift to serving as a work-from-home customer support representative that can help supplement your income until you find a new role.
Work On A Side Hustle
Figure out how to make money while unemployed. Depending on your state, you might be able to bring in money with a side gig while still collecting your unemployment benefits. Working on a side hustle helps you bring in a little extra money while keeping you afloat.
Signing up for delivery services like Instacart and DoorDash, and working on your own business can help you bring in money. Look at gig-economy jobs like UberEats as more people order in. Plus, you might be able to grow a side hustle â like freelancing, consulting, or something else âinto a full-time income down the road.
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Tips To Survive A Layoff Financially
If you have moralistic views about not taking handouts, you can write down every penny you got from every program and make a commitment to pay it back when you can. These programs were created to help people, and in a practical sense, taking money or aid from these programs will not take money from someone elses pocket.
Retirement Accounts You May Be Able To Contribute To
If you have earned income, you may be able to contribute to a retirement plan.
Here are a few options you may have access to.
As long as you have earned income and meet the income requirements, you can contribute to a traditional or Roth IRA.
The contribution limit is $6,000 for 2020. If youre age 50 or over, you can contribute an additional $1,000 catch up contribution.
Spousal retirement options
If you have a working spouse, you may be able to take advantage of their employer sponsored retirement plans. This can include 401 plans.
While the contributions wont be in your name, you can increase your spouses workplace retirement contribution. This can make sure youre still on track for retirement as a couple.
If having equal retirement balances is important in your marriage, you can fix this once youre employed again.
At that time, you can shift contributions to your individual retirement accounts until youre caught up. Then, you can balance between both spouses workplace retirement accounts again.
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Minimum Amount Of Unemployment
If you worked full-time for the six months before the date you became unemployed, here are the minimum amounts you can receive:
With no children: 80% of IPREM, or 527.24.
If you have one or more children in your care: 107% of IPREM, or 705.18.
If you were working part-time for the six months before the date you became unemployed, the minimum unemployment you can expect is as follows:
No children: 263.50
Focus On Finding A New Job
When youre unemployed, it can be easy to focus on things other than your job search to distract you.
You should definitely pay attention to your finances and save for retirement when youre unemployed, if possible.
Your main concern:
Finding a new job.
Once you find a job, you can kick up your retirement contributions back to their normal levels or higher. That way, your retirement funds can catch up.
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How To Come Up With Money To Save
Though Gallagher couldn’t pinpoint a savings target for the “new normal” that we live in, any amount you can save is a good first step.
To find the extra money to save, Khalfani-Cox suggests that people take a pause, reassess things and consider which old rules they can put on the back burner for now.
Below are two ways she says you can alter your financial habits to save more.
1. Only make the minimum payment
The traditional guidance is to pay off your credit card balance in full each month, but if you’re worried about your job, or already experienced a pay cut, reduced hours or unemployment, only make minimum payments on your bills. By paying only the minimum, your balances will increase , but you will at least be maintaining a record of consistent and on-time payments.
“Right now, cash is king,” Khalfani-Cox says. “We don’t know how long you’ll need that extra money that you’re using to pay your debt.” She makes it clear that it’s important to pay off your credit card in fact, carrying a balance will cost you in high interest over time but if your income stream has slowed down significantly, holding off on debt can help you temporarily stretch your cash.
While you take this approach, keep non-essential spending to a minimum.
2. Save in a cyclical manner
Khalfani-Cox suggests making small goals for yourself, whether it’s saving a specific dollar amount or a certain percentage relative to your current income.
Protect Your Credit Rating
Now may not be the time to fret unduly about your credit score. However, there are some steps you can take to make sure it doesnt take too big a hit.
For starters, try to make at least the required minimum payments on your credit accounts and do so by their due dates.
If your mortgage lender agrees to a deferment or forbearance of your loan payments, it should not report your payments to the credit bureaus as being late. Your lender can also provide “a statement that indicates you have been affected by a natural or declared disaster, which can help protect your credit history and credit scores,” according to Experian, one of the three major credit bureaus.
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How I Survived Unemployment
I have never lived through a Depression, and I was not in the workforce during the last recession . I have been unemployed, though. Some of my experiences are not the same. For example, the chances are that we are in this for the long haul. Whole industries are being upended, and the long-term ramification will be felt for a while. However, I do have some tips that can apply regardless of the terms of unemployment. Recession or no recession, the rules remain the same.
Find Ways To Save On Groceries
Resisting the urge to dine out and taking advantage of the food shelf are only part of saving on the overall cost of food. There are plenty of ways to save money when you go to the grocery store. Buy in bulk whenever possible, and take advantage of discounted items and coupons. One caveat: never purchase a sale item unless it is something that you buy regularly. You may end up spending more overall. Most co-ops offer a basic discount for members, and a larger discount if you volunteer a certain number of hours per week.
Joining a local CSA can save a lot of money on produce, and some CSAs offer other staples, such as eggs, meat, and dairy. Ask a friend to join with you and split the cost and the food if you can’t afford the membership. The CSA weekly pickups usually include too much food for one person to eat in a week anyway.
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