At any time you may find that you need additional support as a result of job loss or other life changes. Each situation is unique but the details can be overwhelming. Chesapeake Bank cares. So we’ve rounded up a few resources that may help, along with questions for you to consider.
First, Identify Your Needs:
Whether or not you have an emergency fund established, the next step is to identify basic needs: Food, Shelter, Transportation, Utilities. If an expense doesn't fall into one of those categories, hold off spending until you're back on your feet.
We offer a variety of calculators, coaches, and budgeting tools on our website and within Online Banking to help you crunch numbers and plan.
Resources worth looking into:
- Retirement Savings Plans: You may need to make some decisions if you have a retirement plan at your place of employment—leave the assets in the plan for now or move the funds into an Individual Retirement Account (IRA). *Tax benefits may be available.
NOTE: While taking the cash distribution may be tempting (and even needed), please know that you'll owe income tax on the cash that you withdraw, plus a potential penalty for withdrawing it if you don't meet the criteria. Those two alone can take a significant cut of your money, but then your retirement savings may also be gone.
- Collecting Unemployment: If you’ve been laid off, you may qualify for unemployment insurance. Your benefit, which is taxable income, lasts until either you find a new job or the coverage expires. The term is usually 26 weeks, though it may be extended in times of large-scale unemployment. Here's the link for the Virginia office.
- Negotiating Severance Pay: Unless you have an employment contract, your employer isn't required to pay severance, or termination pay, though some employers do. You may want to check with your human resources department about company policy if your supervisor doesn't raise the issue. If the benefit is available, there is not a set amount or standard. It varies by company. Be prepared to negotiate. Virginia also offers a state severance calculator.
When you accept a severance package, many employers require that you sign a legal document releasing the employer from any claims you may have. You should fully understand the implications of signing the release, so you may want to review it with your legal advisor.
- Staying Insured: It's essential to ensure that you have health insurance for yourself and your dependents. If you've been insured through your employer's plan, ask if there is any way that you can stay on a little longer.
You may be eligible for continuing coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) plan for up to 18 months. But it's not cheap! You pay the full premium your employer pays, plus up to 2% in administrative fees. Some states may require more generous coverage.
Medicaid and Medicare are also options. Medicare is a federal program that provides health coverage if you are 65+ or under 65 and have a disability, no matter your income. Medicaid is a state and federal program that provides health coverage if you have a low income. Sometimes, you may be eligible for both.
FAMIS is another option for qualified families with dependents. This is Virginia's health insurance program for children.
Virginia Dental Association offers information on dental resources and programs in our state for families or individuals who need it.
If you're married or in a long-term relationship, your spouse or partner may be able to cover you. Most employers offer family plans, and some provide coverage for domestic partners. Usually, you can only join through open enrollment periods, but certain 'life events' qualify, so it's always worth asking.
- Financial Obligations: Don’t wait to reach out to your creditors or utility companies. Waiting too long and defaulting on payments will impact your credit. So, it's always best to call the companies you're dealing with as soon as possible and explain what’s going on. Because of the wide-scale impact of the Coronavirus, many institutions will be open to help in some way. Assistance may already be available to relieve your load.
- Food Assistance: Programs like WIC (designed to serve Women, Infants, and Children) and SNAP (Supplemental Nutrition Assistance Program) are also available through your local state government for qualifying families. You may be able to receive these benefits as supplemental assistance, even if you are not out of work.
- Housing: When it comes to housing, the government offers a Housing Choice Voucher Program that can assist qualified applicants with rent. A voucher is paid directly to the landlord each month to subsidize the cost of rent. The landlord then charges tenants the remaining amount, making rent more affordable for low-income families.
- Additional Services and Resources: There are many agencies that can help with a variety of services. One is Temporary Assistance for Needy Families, referred to as (TANF) but more commonly known as welfare. It’s designed to support families who can’t afford basic needs but are on a path to self-sufficiency. TANF is a state-run program. It is a short-term benefit that offers cash and assistance to families for child care, transportation, and even employment training.
Second, nearly every county in our markets has a local 'resource council.' This is a network of human service organizations like food pantries, clothing closets, churches, and agencies that provide 'gap' assistance or direction, etc.
While you can call your local Department of Social Services to inquire about specific benefits, the state also manages 2-1-1 Virginia, which is a digital listing of similar services that you might find in a resource council.
The Virginia Cooperative Extension also offers a variety of programs that may be of need. If nothing else, you may be surprised what comes up if you simply search the internet for "assistance" with your need 'x' in your town.
- What other items can you negotiate with your employer? Prorated bonuses, faster vesting periods for stock options, as well as cash for any unused vacation and sick days are typically things that one could also negotiate.
You may even borrow a company laptop or phone for a little longer while you make other arrangements.
- Consider Volunteering: Some employers become like family and many businesses go through their own hardships. Volunteering your time and services may not be something that you want to do; but if you’re able, and if there is work that can be done remotely or “innovatively,” this might be a great time to show your commitment to your company. Not only does giving back feel good, but it can help keep your skills sharp and your mind busy while you wait.
- Tax relief: Tax time is upon us. Talk to a professional to see what deductions and credits you may qualify for. If you have not taken advantage of stimulus funds, they may also be an option.
Visit the IRS website to see what’s available. While you’re there you can file your taxes for free if you haven't already filed. Set aside as much of this money as you can and only apply it to needs wherever possible until you’re back on your feet.
- If you’re a Small Business Owner: The Small Business Association (SBA) has a disaster loan program for pandemic-related situations.
Also check with your local chapters of the following organizations: Small Business Development Centers, Economic Development Centers, Chamber of Commerce, and SCORE. If they do not have a direct program, they may be able to steer you toward someone who does specifically for small businesses.
Most importantly, take a deep breath and try to only focus on what is needed and what you can do right now. If you have questions about your finances, we’re here to help. Call or visit one of our offices when you’re ready.
**Note: We partner with a company called Banzai that offers financial literacy content like general articles, calculators, and tools. This article was based on their content and significantly modified with local resources that you can use now.