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How To Handle a Personal Finance Apocalypse
Many Americans — and people all across the world — are facing a personal finance apocalypse right now. A lot of people are dealing with a sudden job loss or a major cut in hours. Some people are riding out unemployment insurance, while others may not even have that. Many people are facing unexpected and sudden medical expenses.
If you add that to the fact that almost four in five Americans were living paycheck to paycheck before coronavirus arrived on the scene, this spells a very bad financial situation for a lot of people.
Let’s focus on people in that situation: people who were living paycheck to paycheck until March and suddenly found themselves without work and typically facing other issues like children suddenly not in school and the possibility of medical expenses hanging over their head. What do people and families do in these kinds of situations?
What follows is a guide of steps to follow if you find yourself in this kind of financial apocalypse.
Take smart steps in response to a job loss.
I covered some specific strategies to follow if you lose your job, but these are the most important ones to follow if your job loss immediately puts you on a financial precipice.
File for unemployment.
If you’ve lost your job recently, the most important thing you can do is to file for unemployment or at least verify for certain whether you’re eligible for unemployment benefits in your state or not.
You can start by going to this site, selecting your state and filling out the forms. If you’re eligible, you’ll receive benefits in accordance with the current laws in your state, which likely pay you a percentage of your current pay for some number of weeks (the benefits vary from state to state).
Talk to people you trust in your family, social network and professional network about job opportunities.
The truth is that there aren’t many jobs available at the moment — we’re in a situation where the supply of people looking for work is greatly exceeding the demand for work.
That doesn’t mean that there aren’t jobs available. Rather, what it means is that to get one of those jobs, it helps greatly to be able to use a personal contact. If you know someone who can put in a good word for you in the hiring process, you are much more likely to be able to find a job that matches your skills.
Thus, as soon as you can, put the word out with family members, good friends and any people in your field that you have a good relationship with that you’re looking for work. Stick with people that you think will help and with whom you have a good relationship. A positive word of mouth reference is the best foot in the door you can get right now.
This doesn’t mean you should jump at every job opportunity available to you, but it does mean that you should be starting the job search sooner rather than later. Don’t wait until your unemployment benefits are running out to begin the search; it’s a lot better to lose a few weeks of unemployment to get a good job than to let it all run out and then not have a job for weeks afterward without any benefits.
While you’re waiting, sharpen your skills.
What skills do you bring to the table? How can you keep them strong during this downtime? If you can’t think of particular skills, what attributes do you bring to the table that make you a promising hire?
There are a wide array of skills that you can work on and traits you can improve at home, ideally in the form of some kind of project. Even if your most valuable trait is physical fitness, you can spend this time whipping your body into the best shape possible with home exercise.
The goal is to make yourself a really good option for hiring managers so that when hiring does pick up, you look like a desirable candidate.
Assess your basic needs, and use Aunt Bertha.
Aunt Bertha is an incredibly useful tool for finding reduced cost and free services in your area, particularly if you’re undergoing temporary financial hardship. The best way to get started (besides just going there and typing in your zip code) is to assess your needs so that you know what kind of help you’re looking for.
Start by assessing your basic needs: food, water, clothing, and shelter. Do you have enough food on hand to feed everyone in your home in the short term? If you do, good. If you don’t, use Aunt Bertha or Food Finder to find a food pantry near you. This is the exact situation that food pantries exist for, so don’t hesitate to use your local food pantry.
Along those lines, don’t hesitate to sign up for Supplemental Nutrition Assistance Program benefits, which will help supplement your grocery budget.
What about shelter? If you’re facing a rent or mortgage payment that you’re going to be unable to cover, talk to your landlord or to your mortgage lender sooner rather than later. Working out a payment arrangement before you start missing payments — or before you’ve missed many — will help you stay in your home. Not communicating and hoping everything will “just work out” will make you among the first evictions when courts open back up. Communicate, communicate, communicate.
What about utilities? If they’re not included in your rent, start with the most fundamental ones. Talk to your water and sewage providers to see what you can do to keep those services on. Talk to the energy company and see what you can do to work out a payment plan to avoid having your power cut off. If you absolutely need a car in order to be able to get a job and have a car loan, talk to your car lender.
The key is to work out payment plans with the most important bills first, then move onto the less important ones so that if you can’t work out a payment plan with them, the loss of that service will be less painful.
Do not let your pride stand in the way of these things. Many people won’t turn to a helping hand in a moment of need out of personal pride. Don’t let pride keep you from having food on the table or a roof over your head. If you feel too proud to “take a handout,” then consider it to simply be borrowing for a while, and aim to pay it back when you can.
For example, if you need food on the table, don’t hesitate to take a bag from the local food pantry or sign up for the Supplemental Nutrition Assistance Program, but when you get things back on track, give your local food pantry a donation that matches or exceeds what they gave you. Pay that help forward!
Use what income and resources you have (unemployment, stimulus check) wisely.
Once you’ve established that your basic needs are secure and that your basic bills are at least addressed with some sort of payment arrangement or understanding, the next step is to assess the money you have on hand and what you have coming in.
What’s currently in your checking accounts? Your savings accounts? Have you received a stimulus check, or will you be receiving one? How much? Will you be receiving unemployment benefits? How much? What cash do you have on hand?
Use those resources to start budgeting for the next few months. Given the money you have on hand and the money that you know will be coming in, will you be able to cover your basic bills and food needs for a few months?
Cancel all non-essential services. Things like cable television, home internet and streaming services aren’t essential for most people. If you have an over-the-air antenna, you have lots of television options. If you need to be contacted, a basic landline or very basic cell phone service will suffice; contact those providers to strip your service down to the minimum.
What about credit cards? While it’s good for your credit history to keep at least your minimum payment paid on your credit cards, if you’re choosing between a credit card minimum payment on a maxed-out card versus buying enough food for the week, choose the food. This should be the lowest priority amongst your bills, and you should only be paying the minimum.
What about student loans? You should contact your lender immediately and get those loans into forbearance. This should be pretty straightforward.
Center your diet around inexpensive healthy staples. When you hit the grocery store (to supplement your food pantry items), focus on things like dry beans, dry rice, flour and yeast, peanut butter, whole chickens and whatever produce is on sale. You can make bread from the flour and make all kinds of meals from rice, beans, chicken peanut butter, and fresh produce. Buy everything in store brand form that you possibly can.
For example, I recently bought a large bag of bulk dry pinto beans for less than $0.50 per pound. A pound of dry pinto beans turns into three to four pounds of cooked pinto beans, and when seasoned even a little turns into tons of food that can be used in lots of ways. That’s very inexpensive nutrition that’s only as dull as the seasoning, for about a quarter a pound including the seasoning.
Be a rock, even if you’re scared and worried.
In times of intense personal and financial crises, people can sometimes not be their best selves at the very moment when the more vulnerable people in their lives need them to be their best. While this might feel like a crisis you’re personally bearing, it’s likely that the others in your home are struggling mightily right now, too, and they’re looking to you to lead them and be their rock to lean on, whether that’s something you’re ready to accept or not.
As you make your way through this challenging period, here’s some advice on stepping up in non-financial ways for the others in your home.
Find healthy ways to control your emotions and give yourself constructive outlets.
A financial meltdown can leave you feeling helpless and anxious and overwhelmed, and finding ways to handle those feelings in a way that’s constructive rather than destructive is vital. Sitting around all day letting your emotions fester and then lashing out at the people around you isn’t a healthy thing for you or for anyone else.
Find some sort of healthy outlet for those emotions. For some, it’s vigorous exercise, like running or doing lots of pushups. For others, meditation and prayer make a ton of difference. For still others, writing in a journal can make a ton of difference. Going on walks in the woods. Simply talking it all out before it boils over. Taking on a deeply engrossing project. All of these things can be a powerful way to control your emotions in a healthy way.
Try some of these things. Go for a run outside, walk in the woods, push-ups, pray, write your thoughts in a journal or make something that takes a lot of your focus and time, like making some bread and kneading that bread by hand. See which of those feel like a good outlet for those emotions.
Don’t turn to addictions.
It can be tempting in moments of crisis to turn to addictions that can temporarily take the pain away. Drugs and alcohol can seem like a great answer simply because they can make those feelings of stress and anxiety go away temporarily.
The problem is that the relief from those feelings is only temporary, those vices come with an additional financial and health cost, and they often alter your mood in ways that aren’t good for the people around you.
If you are tempted at all to turn to alcohol or drugs to make negative feelings go away, don’t. Throw those things out and find better ways to deal with those emotions.
If you’re feeling overwhelmed, say so and step out for a little bit.
Almost all of us are feeling overwhelmed at times right now. The key is how we deal with those moments of feeling overwhelmed.
If you’re in a moment where your emotions are completely overwhelming and you feel you’re on the verge of making a serious mistake, check out of that moment. Just go to another part of the house or walk outside and take a few deep breaths and get yourself under control. Responding to your own sense of being overwhelmed — or someone else’s sense of being overwhelmed — with anger or some other form of a negative emotional flood will not help anyone, you or them.
It is OK to say, “I can’t deal with this right now. I need a few minutes,” and just check out of the moment. In fact, that’s the mature way to handle those moments when you can’t handle that flood of feelings.
Remember the “Serenity Prayer.”
Even if you’re not a Christian or believe in any sort of higher power, the core advice of the Serenity Prayer as expressed by Martin Niemoller is invaluable.
It goes like this:
God, grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference.
There are things in life that are simply outside of our power to control, and letting ourselves get too caught up in those things isn’t helpful. Rather, you should focus on things that are within your realm of control – the emotions inside your head and heart, the things you do with your body, the thoughts you have about the world and others. You control those things. Focus on those things and what you can do with them to make things the best you can for yourself and the people around you.
Remember that this isn’t the end of your journey.
When lots of things go wrong at once, particularly when those crises affect many different areas of your life, it can feel overwhelming and kind of hopeless. Remember that, no matter what is going on right now and no matter how bad it seems, things have been bad in your life before and they eventually became better.
Things will get better from here, too. Focus on what you can control and what you can do. Secure your basic needs for you and your family. Wake up each day asking yourself what you can do to make the most of this situation.