7 Tips to Get Through a Coronavirus Furlough

a woman in medical gloves holds an empty wallet
Photo by Cryptographer / Shutterstock.com

Originally published by Matthew Goldberg on Bankrate.com.

It doesn’t matter the industry or the occupation, a furlough can happen to just about anyone.

That’s why it’s important for those dealing with the financial difficulties of a recent coronavirus-driven furlough to know there are a number of ways to try to stay afloat when you’re not receiving your normal pay.

Even if you’re lucky enough to still have your job today, it may be in your best interest to take some proactive steps to plan ahead in the event a furlough, or layoff, impacts you in the near future.

Facing the economic uncertainties of a pandemic, it’s entirely possible that you could potentially be the victim of an employment interruption at some point.

Here are seven tips for surviving a furlough in these tough times.

1. See if you’re eligible for unemployment insurance

Take advantage of benefits available through the Coronavirus Aid, Relief, and Economic Security (CARES) Act or unemployment insurance benefits. The U.S. Department of Labor has answers to some of your eligibility questions.

Pandemic Unemployment Assistance may be an option for those who wouldn’t normally qualify for regular unemployment compensation.

“The Federal supplement to the state unemployment benefits now makes a big difference,” says Mark Meredith, certified financial planner at Meredith Wealth Planning in Maryville, Illinois.

States give an additional $600 weekly payment to eligible individuals receiving other benefits under federal Pandemic Unemployment Compensation.

2. Your bank or lender may provide short-term savings options

Many banks are waiving certain fees or allowing borrowers to defer payments.

For homeowners, a monthly mortgage payment is usually one of the highest expenses. A mortgage forbearance takes a big expense, temporarily, off of a person’s plate if they’re eligible.

“This could be a good way that you could potentially reduce your monthly outflow towards living costs,” says Amar Shah, CFA, certified financial planner and founder of Client First Capital in San Diego.

Those with federal student loans can take advantage of the CARES Act, which automatically stops student loan payments until Sept. 30. During this time, interest is being temporarily set at 0%.

Unfortunately, private student loans aren’t covered under the CARES Act.

Bankrate is tracking how many of the largest banks are helping their customers. See if there’s a way that your bank can help you during this emergency.

3. Set a furlough budget

Cut back on spending now to either survive your furlough or prepare for one. Budgeting is the best way to see where your money is being spent.

“Take a close look at your monthly budget,” says Greg McBride, CFA, Bankrate chief financial analyst. “Identify which items you could cut back or eliminate right now. And identify those items you could cut back or eliminate if conditions get even worse.”

Making meals at home, instead of getting delivery or takeout, can save you money. Also, you may be able to cut costs by analyzing your subscription services, gym memberships and other expenses that are on autopilot.

Also, reevaluate your fixed expenses. It’s not uncommon to switch auto insurance and homeowners insurance providers and save $500 to $1,000 a year, Meredith says. Your cell phone bill might be another area of opportunity.

“I think people, when they’re so ingrained in their work lives, they rarely have the time or desire to look into it very deeply,” Meredith says.

4. Balance transfer credit cards can buy time

This emergency can be a little easier to handle if you have more time. More time can help you save, cut your budget and hopefully find a steady income. There are a few lending tools that can do this.

Consider using a balance transfer credit card, a 0% introductory offer or a balance transfer offer on an existing credit card.

One caveat is that part of a new credit card application will likely be based on your income. So, those who still are employed may be in a better position to take advantage of a low or no-interest period. Some banks may charge an upfront fee of 3% to 5% to take part in these offers. If you don’t have the best credit, a personal loan is another option for getting the funds you need.

Be aware of what you’re charging on this credit card and have a plan for how to pay it back — preferably before the favorable interest period ends.

“Limit it to essential spending only,” McBride says.

Keep in mind, losing your paycheck is an emergency.

“So, somebody who’s already been laid off, this is a time when it’s OK to make the minimum payment on your credit card,” McBride says.

5. Try to avoid touching your retirement savings

You may qualify to take a penalty-free withdrawal from an eligible retirement plan, such as a 401(k). But these withdrawals should only be an absolute last resort.

Some coronavirus-related withdrawals won’t have a 10% early withdrawal penalty if they’re made in 2020. But keep in mind that you’ll still have to pay taxes on these withdrawals, though you may be able to spread these payments out.

Also, you could use a Roth IRA as an emergency option if other options aren’t available. Contributions from a Roth IRA can be withdrawn at any time.

A $10,000 withdrawal from your retirement account today could be $57,000 in lost retirement savings 30 years from now, McBride says. That’s based on a 6% annual rate of return.

Annual contribution limits and the fact that you might never replenish these retirement funds are also reasons to avoid this route if possible.

6. Find saving opportunities

Try to keep adding to your emergency fund, if you have one, and are still working.

“Do that with any stimulus check you may be receiving, your tax refund and with the discretionary spending you’re not doing,” McBride says. “It’s the money that’s not being spent in restaurants, at movie theaters or ball games — is money that you can be putting into savings to pad your cushion.”

Look for other ways to try to replace income, if necessary. It’s OK to dip into your emergency savings if you’re furloughed right now, since this is an emergency.

Even if you entered this furlough without an emergency fund, hopefully spending cuts can help you create one on the fly. Consider keeping these funds separate from your normal checking account.

Keeping it separate can prevent it being spent and may help you earn more interest. (Compare savings accounts on Bankrate to find the right one for you.)

7. Achieve a goal during furlough

You’d rather be receiving paid time off or be working. But you can’t control being furloughed, so it makes sense to use this time wisely.

This could be a good time to complete a project around the house or achieve a career or personal goal. These actions could help you improve the value of your house or improve yourself for a future job.

You might be able to find an interesting (and possibly free) webinar, virtual learning experience or online group related to your professional development. Also, look into finding organizations or societies related to your career, if applicable. The organization, or some of its members, might be going through the same situation and could offer helpful advice.

Perhaps it’s also a good time to update your resume in case the furlough turns into a layoff down the road. It might also be a good time to reconnect with old colleagues, your professional network or your alma mater.

Catching up virtually or on the phone seems more commonplace with at least parts of the U.S. on pause and under stay-at-home orders.

“Now [that] you have this extra time,” Shah says. “Make sure you’re capitalizing on it.”

Prepare for future furloughs or a permanent job loss

Spending every cent wisely has never been more important. Keep your spending to the essentials as much as possible.

“None of us knows exactly what the road ahead entails,” McBride says.

Those who are still employed or are only furloughed with reduced hours or pay should use budgeting to save even more.

Learn more:

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Read Next
21 Items to Cut From Your Budget That You Won’t Even Miss
21 Items to Cut From Your Budget That You Won’t Even Miss

Start off the new year by implementing these small-but-smart savings strategies. They’ll soon add up.

20 Great Part-Time Jobs for Retirees
20 Great Part-Time Jobs for Retirees

Maybe you’re not ready to leave the workplace entirely.

7 Unexpected Perks of Downsizing as a Retiree
7 Unexpected Perks of Downsizing as a Retiree

Downsizing your home offers many benefits, including some you may not have anticipated.

7 Things I Never Buy at Costco
7 Things I Never Buy at Costco

A bulk buy isn’t always the best buy. Here’s where I shop for these items instead of a warehouse club.

7 Things That Prove Cheaper Isn’t Always Better
7 Things That Prove Cheaper Isn’t Always Better

These items can end up costing you more if you try to go the cheap route.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
Will I Get My Ex-Husband’s Social Security When He Dies?
Will I Get My Ex-Husband’s Social Security When He Dies?

Two factors determine how much money is coming to you.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

21 Things You Should Always Buy at a Dollar Store
21 Things You Should Always Buy at a Dollar Store

Dollar stores have great bargains on these familiar purchases. Yes, even pregnancy tests.

13 Brilliant Bulk-Buy Items on Amazon
13 Brilliant Bulk-Buy Items on Amazon

Every household should have these products on hand. Buying them in bulk on Amazon saves you cash.

6 Reasons I Will Never Trust Suze Orman
6 Reasons I Will Never Trust Suze Orman

Beware: The self-proclaimed personal finance expert has a track record that suggests more sizzle than steak.

This Type of Social Security Benefit Is Often Overlooked
This Type of Social Security Benefit Is Often Overlooked

The Social Security Administration is not helping certain people get money to which they are entitled, a report says.

Getting These 2 Shots Could Reduce Your Risk of Dementia
Getting These 2 Shots Could Reduce Your Risk of Dementia

These vaccines may lower the risk of Alzheimer’s disease by up to 40%.

9 Everyday Problems You Can Solve With Vaseline
9 Everyday Problems You Can Solve With Vaseline

Forget expensive specialty products. Good ol’ petroleum jelly can address many common annoyances.

America’s Most Reliable Appliance Brand Is a Surprise
America’s Most Reliable Appliance Brand Is a Surprise

Have you heard of this appliance manufacturer?

16 Amazon Purchases That We Are Loving Right Now
16 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

19 Purchases That Buyers Almost Always Regret
19 Purchases That Buyers Almost Always Regret

Think twice before buying these things.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

7 Tips for Building an Emergency Stockpile
7 Tips for Building an Emergency Stockpile

A pandemic or natural disaster could leave you reliant on your existing food supply. Is your pantry prepared?

8 of the Worst Things to Buy at a Dollar Store
8 of the Worst Things to Buy at a Dollar Store

Not everything sold at dollar stores is a great bargain or a safe purchase. Here’s our list of products to avoid.

Homeowners Say These 2 Kitchen Appliance Brands Are Best
Homeowners Say These 2 Kitchen Appliance Brands Are Best

One brand takes five of the top honors, while another ranks highest in three categories.

41 Things You Should Never Buy
41 Things You Should Never Buy

Some purchases are just plain dumb. Give yourself — and your budget — a break. Don’t spend money on this stuff.

9 Indestructible Products That Are Worth the Price
9 Indestructible Products That Are Worth the Price

If you’re willing to pay a little more for these products, you may never have to shop for another again.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

Is a Second Stimulus Check Still Coming?
Is a Second Stimulus Check Still Coming?

The status of another round of direct payments to taxpayers is a mix of good and bad news.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.