This Coronavirus pandemic is really to one is a health crisis.
The other is a financial crisis and that will arrive at the doorstep of millions of people’s households in the form of unemployment, either the cut and dried variety, the suspended animation we know as a furlough, or you might just be self employed and demand dries up.
In any of these events, you really would love to be able to pick up the phone and talk to your plain spoken financially savvy aunt Jill.
And luckily we can.
Jill Schlesinger, CBS News, business analyst and host of the excellent, Jill on money podcast.
Where do we start with this?
There’s a new form of unemployment out there pandemic unemployment assistance.
This is covering more people as I understand it.
Right, this came out of the Cares Act.
And it’s incredibly important that you’re sitting in California, I’m sitting in New York right now.
The way that you would file for unemployment is through your state, and you would get a certain amount of money with a maximum.
And for many states, it’s 26 weeks of coverage that you get paid for.
It’s usually not a ton of money by the way, I mean for those specially if you’re used to earning a lot of money, you might get four or 500 bucks, but that may be a fraction of what you usually get in your paycheck.
On top of that, however, because of the cares act, you have 13 more weeks of coverage.
So you’ll have 26 weeks of unemployment insurance plus an extra 13 weeks.
You’re also going to get an extra $600 a week.
From the federal government.
This is interesting.
I make sure I’ve got this right for everyone the standard 26 weeks of unemployment, you go through your state to get that the other new 13 weeks runs sequentially at the end of that.
And then the additional $600 is where does that?
So, that’s concurrent for four months as of now.
Okay, so there’s a lot of different layers here for people to understand two of which they probably never heard of before.
And this would all be paired.
When you have you really the number one thing you should do if you’re furloughed or laid off or fired or your business has closed, you just go to your state and you apply for unemployment benefits.
Do not call, please don’t call
because you’re gonna be on the phone for hours.
these state systems are bulging they are and frankly, The State of California State of New York state of New Jersey these systems all crashed when people are actually trying to apply for benefits should be getting better now but be patient.
Do file if you’re at all worried.
Don’t worry, just do it.
Those are the forms of unemployment insurance that are new and old together.
Separate from that, we have our one-time relief checks of I think it’s still 1,200 for a person, 2,400 for a couple.
That’ll be a one-time thing, right?
Yes and it’s limited by income.
So if you make less than $75,000 as an individual or you’re married filing jointly and you are under 150,000, you will get the full amount.
Now, if you go from 75,000 to 99,000, as an individual or 198,000 as a couple You will get a fraction, a little bit less, but you’ll still get something.
Once you go over the 99,000 as an individual or 198.
It’s a couple, you don’t get bubkis
Okay, so at the last part that’s 75 to 99.
There’s kind of a gradual tail and then, you drop off a cliff.
So that makes sense there.
Furloughs this new thing.
We used to either be employed or we get fired.
Furlough was pretty exotic before this.
Now all of sudden it’s the new f word.
You don’t typically get paid, companies will pay that diff and they’ll say yeah, we may have your health benefits turned on, we may not.
But in terms of the financial part of this, if a company will let you.
Take your furlough by drawing some of your PTO or all of it.
Is that a good idea?
Or should you leave the PTO as almost like a bank account and just work on these unemployment things we’ve been talking about?
I know it’s hard to say and it’s really his company specific you are gonna have to make an estimation of whether your company is going to probably hire you back or not.
So no concept is really one of these.
It’s sorta a little bit different.
The flavor of it is We’re telling you to go home, chill out, you’re not working, you’re not getting paid, we likely will cover your health insurance which is huge, right?
And we intend to bring you back after this period is over.
I’m reluctant to give like this broad advice because every company has a very different policy.
There are some companies that say You know what, if your do vacation time, and we haven’t given it to you and we lay you off tough targets, you get nothing.
Some will say, we’ll make that as part of your package.
It’s sort of a severance package.
So I’m sorry to say that there’s no generalized answer.
The interesting thing you also said there is do your gut check on whether they really mean furlough Or whether they really mean they’re kinda just backing out of having to say you’re fired and they’ll get to that later.
We don’t know how that’s gonna play out.
Cuz a furlough, I mean, as far as I know, isn’t a guarantee you’re coming back.
It’s a letter of intent, essentially.
Right, I mean, you could compare this in a different way with, remember when the government shuts down and they furlough government workers.
I think in that respect, you know you’re coming back.
The government’s not welching on that deal.
But if you’re working in retail, an industry that is hemorrhaging right now There’s very there’s a high probability that some retailers aren’t going to make it right.
You just have to decide, are you willing to throw your lot in with that or not.
And what I do really believe is that Remember, a furloughed worker can apply for unemployment benefits.
So go ahead and do that.
Apply for your unemployment benefits.
Get them but
But if I were in an at risk job or an at risk company, I would be looking for work on the side also, and I would start developing my plan B pretty quickly, because I think there’s a high likelihood that there are going to be some survivors, but some who don’t survive this crisis, but it’s starting to become clear and clear clear that this is not a short lived crisis that this is going to last a lot longer than people were initially expecting.
And as a result, you’re you’re absolutely right.
There are going to be companies that will sort of use the cover of this virus to essentially remake themselves.
This will be a different economy when we come out of this.>> Let’s talk about the way you should play in Europe.
For a lower unemployment strategy.
The new loosen rules for taking a loan out of your 401k.
I know as a financial planners this was always one of those things that you look at has a huge red flag around it.
That is any of that
Well, you know, I’m a big wimp, so I don’t like taking risks.
I really don’t.
I mean, it’s funny thing that I started my career as a commodities trader because I am essentially just a hedge, Hater of risk somebody called my podcasts and asked me about a loan against their 401k plan.
And I asked a question, which then seems like that not that big of like how secure is your job?
And it seems like which is always a silly question to ask when the economy’s doing fine because everyone’s like, I’m great.
You can pull money out of a 401k if you are younger than the age of 59.50.
Not pay a penalty, there is usually a 10% penalty if you are under that age.
Well that penalty is waived if your impacted by the pandemic.
And you have three years to pay the tax that’s due on it.
Okay so a tax is still due but you got a lot of time to do it.
Right and you know what?
So when I say I’m a wimp, my fear is that sure you can take the money out but I wonder if you’re really ever going to get it back in.
Look, if it’s the last resort, of course I don’t want you to starve.
I want you to make really smart choices but You know if there is a way that you could even get a loan from a family member or you can maybe get a personal loan, there is a lot of great personal installment loans out there.
It would probably be more productive for you in the long run because I am very worried that people are going to deplete their retirement accounts.
Last thing, as we go through all these strategies to aggregate and have liquid cash and money and
And funds to work with, by hook by crook.
Let’s say you’re still short, what bills do you prioritize in terms of your financial plan or your credit rating.
So the good news on the credit rating part is that if you blow it on paying bills right now and you have been impacted by this pandemic, the credit rating agencies say they’re not gonna hold this against you.
So that is good news.
I have one priority right now for everybody.
Food is your priority.
And after that, Everything else is negotiable.
And I say that not to be glib, but it’s true.
You if you’ve been laid off, let’s just say that today, I’m working in a high risk business and I get laid off or furloughed.
The first thing I’m going to do is make a list of all of my bills and the only one I really care about us food.
Because I have got to feed myself and my family.
And that can run out very quickly, where even getting evicted, even if it were to happen in this supposedly forgiving time.
That takes longer, but you can go hungry pretty quick.
Exactly, so we going to make sure you ‘ve got enough to feed you and your family.
Next shelter, so you’ve got a rent or you’ve got a mortgage.
First thing you do, you call the lender, you call the landlord and you say I am not gonna be able to pay this bill, I need some forbearance, which just means breathing room.
And a lot of the lenders out there will give to you, especially if these are loans that are backed by Fannie or Freddie, which are government agencies or [UNKNOWN].
And the key here is that even though the whole globe is talking about the exact same thing, the health problems and the financial problems of this pandemic.
We assume everyone knows Yeah, I need help.
My lender knows that.
We have to assume that you’re the only person who knows that you need help and reach out
I spoke to a guy who owns a fascinating company.
It’s laser tattoo removal.
And he had six shops in New York.
And he had to close all the shops is not essential, right?
No Hee told me he called all the landlords, he called his utilities, his internet service providers, his vendors and he basically told everybody, I’m shut down.
I’m under lockdown by the state of New York, by the way.
So I can’t open if I want to.
I have no money.
I’m applying for every SBA loan out there.
I need help.
And he said that 95% of the calls he made were really settled per like almost perfectly where they would say like you’ll pay us at the end we’ll add time on don’t worry, there’s no fee you can Go dark.
I know some people out there, all of us we don’t want to admit that we’re in a bind because when you have to make that call, you’ve just admitted that things have gotten very hard.
That’s always psychologically hard.
And also we have some degree of shame or something which we shouldn’t have in this environment.
But nothing looks better like you say to someone, you owe money to, Then to be proactive versus looking like a deadbeat by waiting till the last minute.
That is, it’s so true and you know, I think that but just by going back to basics, looking at what’s going on in your own life in your cash flow.
This is the one aspect of your life over which you can exert a tiny bit of control.
You can do something here, right?
So you’re going to list your bills out.
You can get the you know, get online call, wait on hold, who cares?
You know, you’re in the worry I have as somebody who’s feeling.
Fielding a lot of these questions, is there are people who don’t have the resources.
I’m talking to you, it’s cool.
We’re doing a video chat and we’re very comfortable with technology.
I was talking to somebody who said I don’t even know how to file unemployment benefits online.
I’m so scared.
And We hooked her up with somebody who is at her local library who did a conference call with her and like basically did all of the application for her on her behalf through the library system.
And you know, we just it’s hard for some people.
Yeah, I know this is the time when we’re really being reminded of the digital divide, which after all these years were 25 years into the digitization of American culture.
And we still have millions of households out there that either don’t have broadband or Just for whatever reason, there’s a whole slice of people who just don’t get the Internet.
They aren’t digital people.
They’re not online.
And this is a really scary time for them.
I mean, I’m looking at my bank’s website, one of the largest banks out there, says, do not call.
You’ll be on the phone forever.
Use our site and our app.
What does that mean to someone who’s not tech-savvy?
Yes, that’s exactly
They’ve just been told the banks closed essentially.
Well, so here’s a good thing that you can do if you if you’re lucky enough to just be watching or listening to this and you feel somewhat better.
Comfortable is reach out to some family members, some friends who you don’t think are going to actually do things on their own and offer help, and try to be there.
Yeah, become sort of a family.
Peacecorp volunteer on the text side.
And do this, do the kind of thing that you take for granted.
It’s so helpful.
What I think is important Bryan is that.
This is such uncharted waters.
This is a health pandemic that has morphed into a financial and economic pandemic.
Anything you can do to help a friend, a neighbor or a loved one It is so important that you just do it.
In all honesty, and you’ve seen a lot in the financial world, many of us have seen much less but have you ever laid awake in the last two or three weeks unable to sleep, scared?
Well, I mean, it’s weird I feel like I’m too busy to be scared, but sure, I mean I have felt scared about a lot of things.
I’ve felt scared for the small businesses that I have actually heard from.
I feel scared for Millions of Americans who are living on a shoestring who really never participated in the recovery that many others did after the Great Recession.
So I feel I don’t feel fear for myself as much as I feel fear for the country.
And I don’t mean to be hyperbolic.
I mean to say that when I talk to Nobel Prize winning economists and they say things like, well the predicate for this is the Great Depression.
That’s a pretty frightening statement and what I will tell you is the good news is that we’ve learned a lot since then.
So that is the good news.
And the bad news is, I think that it is a little bit too rainbow and unicorn to think this is gonna be short lived.
So I think we should prepare To really go to battle throughout this year, hopefully it happens sooner that we come out of this but be prepared for the worst.
And you will be maybe pleasantly surprised if it’s not the worst.
Okay Jo, we are really lucky to have you in our family and to be able to bring you to our viewers.
Thanks for the advice.
We’ll check back again soon.
And if you aren’t already subscribing to Jill’s Jill on money podcast, you really should right now.
I’d say that even if I didn’t work with her