It’s heartbreaking to see so many people in need, but what makes it worse is that many feel shame or guilt in accepting help and aid. They see it tarnishing their prior workplace achievements and reducing their confidence and self-respect.
Up here in Vermont, many are hurting financially. Yet, some are reluctant and embarrassed to take advantage of the help provided to them by the CARES Act, and other available assistance.
We must convince our neighbors that they have nothing to be ashamed of, and help them understand the financial assistance options available. We need to easily and clearly provide them with information and resources that will quickly get them the local, state and federal help they desperately need.
Many people who find themselves in financial crisis have NEVER filed for unemployment, received food stamps, gone to a food bank or ever needed community aid of any sort. They believed that this is for other folks who don’t have the same work ethic they have. Many made it—barely—through the Great Recession, and just when times were good again—the pandemic happened.
Sadly, too many have lost low-paying service jobs and were in fragile financial condition before the pandemic. A 2018 survey by the Federal Reserve Board found that four in 10 adults could not cover a $400 unexpected emergency expense. These are the Americans being hit the hardest economically.
The lifelines being extended as a result of the pandemic are no different than the disaster relief provide after an earthquake or tornado. The relief being offered ensures that our citizens will survive financially, which in turn will help quickly restart our economy when this crisis if over. If you are struggling as a result of the pandemic, remember that you did nothing wrong. You have been struck by an economic hurricane.
Without guilt or shame, be grateful and take advantage of the following options that may help you survive financially through the pandemic:
• IRS Payment: CARES Act funds from the IRS should be received by many taxpayers and social security recipients by mid-April ($1,200 per adult, $500 child/dependent) if the IRS has your direct deposit information on file. Paper checks via the mail will take much longer to reach you, perhaps several months.
• Unemployment Insurance: If you are among the millions who have lost your job, been furloughed, or had your hours reduced, you should apply for your state’s unemployment benefits. Unemployment benefits have been extended to a maximum of 39 weeks and includes a federal payment of $600 a week in addition to your state’s benefit. The CARES Act extends unemployment benefits to the self-employed for the first time and this includes contractors and gig economy workers like Uber drivers.
• Retirement Savings Loan or Early Withdrawal: Those diagnosed with COVID-19 (or their immediate family members) or suffering financially due to the pandemic are eligible for loans of up to $100,000 from their 401(k) or 403(b) plans, if their plans offer loans. The CARES Act also allows early withdrawals (before age 59) from 401(k), 403(b) and IRA accounts of up to an aggregate of $100,000 without paying the penalty tax. All withdrawals will be subject to income tax payable over three years.
•Student Loan Relief: If you have federal student loans there is forbearance on both the interest and the principal balance until Sept. 30. Failure to pay your student loans over this time period will not negatively impact your credit score. This relief does not apply to private student loans.
• Small Business Assistance: If you own a small business (less than 500 employees), you can receive loans from the government that include tax-free loan forgiveness for 12 weeks of employee payroll, health care and other business expenses.
• Mortgage and Rent Forbearance: The CARES Act calls for suspension of foreclosures for 60 days on mortgages backed by the government, and individuals have the right to request forbearance on loans for up to 180 days and to request an extension for up to an additional 180 days. To get this relief you MUST contact you loan servicer. Regulators have asked lenders and mortgage servicers on loans not backed by the government to consider loan modifications and similar forms of forbearance.
• Utility Bills Relief: Many utility companies (heat, electricity, phones and cable/internet) are offering relief to their customers on bill payments. If you having trouble paying these bills, call your provider and see if they are offering assistance to their customers.
• Auto Loans and Credit Card Relief: Contact your auto lender to see if they may be willing to suspend payments for a period. Same with credit card companies. They won’t do it automatically, you have to call.
• Local Assistance: Communities are setting up funds to help folks with necessities and there are food banks that can and should be used in an emergency.
• Credit Cards: You can pay some of your bills and expenses with your credit cards if they have not maxed out yet.
• Friends and Family: Finally, you can reach out to friends and family members for help.
I see this crisis bringing Americans closer together, but only if we support those in direst need. For as President Teddy Roosevelt said in 1912: “This country will not be a permanently good place for any of us to live in unless we make it a reasonably good place for all of us to live in.”
John Pelletier is director of the Center for Financial Literacy at Champlain College, Burlington, Vt.