Depending upon where you are in the US economy, this pandemic may be treating you very differently. Some folks are still working, busier than ever, and experiencing economic prosperity. Yet others are seeing paychecks shrink, jobs eliminated completely, and the specter of safety net benefits such as unemployment and economic stimulus subsidies coming to an end. Others, may be right in the middle; still working, but not enough. Whether you are employed, under employed, or unemployed, there are a few tips to keep in mind during the pandemic.
No matter which category you are in, you still want to be a bean counter and assess your spending, reduce your cash outflow, and know where you stand. Prepare a personal balance sheet by listing all of your assets in one column, and all liabilities in another. Subtract the liabilities from the assets to see where you stand. Ideally, you have a positive number with assets exceeding liabilities. If you do not, it’s time to seek help. You need to know whether you have a cash flow problem, or a spending problem.
Employed
If things are stable for you on the job front, continue participating in your retirement plan (think 401(k)/403(b)). You should review your long-term goals and make sure that you are on track to meet those goals.
If, however, you feel things are shaky with your employer and your job security is in question, consider temporarily cutting back on retirement plan contributions to boost cash reserves. Do not cutback below the employer match level or you will be giving up free money. Re-evaluate every quarter and don’t forget to restore contribution levels once the threat has passed.
Under Employed
If you are employed, but working reduced hours, remember that you may be eligible for partial unemployment. If you are in California, head over to EDD Partial Claims and explore filing a partial unemployment claim. You do not have to look for a new job to be eligible because you are considered partially unemployed.
If you need more monthly cash, and are still participating in your retirement plan, consider temporarily reducing your retirement plan contributions as described above under Employed.
Unemployed
It happens to all of us at one point, we get the ax, the pink slip, we're downsized. If you are let go from work, be sure you have filed for unemployment. It's yours, so don't be shy about it. You should also take the following steps:
– Implement PERK. List all monthly expenses and next to each one either write Postpone, Eliminate, Reduce, or Keep. PERK! Postpone goals that can wait, like a car, appliances, etc. Eliminate services you are paying for but not using, like the gym. Reduce services you are paying for but can cut back on, like meal delivery or personal shoppers. Keep the necessities that must be paid, like rent or mortgage, and insurances. Spend with intention.
– Stop paying additional amounts over the minimum on loans and credit cards. It’s important to keep paying your minimum payment, but for now, don’t pay extra.
–Stash your cash! If you have yet to spend your stimulus payment, tax refund, or bonus, add it to cash reserves. Likewise, with cash you freed up from PERK and from paying over the minimum on loans and credit cards.
– Reach out to 211.org and see what additional assistance you qualify for. You may be pleasantly surprised at the aid available.
If you do leave a job and are at least age 55 and up to age 59 1/2 don’t forget about The Rule of 55. The IRS allows participants laid off, fired, or who quit their job between age 55 and 59 1/2 to access current 401(k)/403(b) funds without penalty. Ordinary taxes are still due. This applies any time an employee leaves their job during or after the year in which they turn age 55. One thing to keep in mind, is that if you have an old 401(k) from a previous employer, separate from and in addition to your current account, you cannot tap that old account. It has to be the current account. If you rolled that old account over to your current employer’s plan, you should be good to go.
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