$600 bonus unemployment benefits end soon. Here’s how to prepare

Though America’s unemployment rate fell to 11.1% in June as employers hired 4.8 million more workers, another 17.8 million were still out of luck. They remained jobless, the government reported on Thursday.

Plus, 1.4 million more people signed up for unemployment benefits last week. So, while the job market is improving, it’s still pretty grim — thanks to the coronavirus.

A weekly benefit boost has made unemployment a little easier for those who lost their jobs to the pandemic, but soon they’ll have to survive without the bonus money.

The Coronavirus Aid, Relief and Economic Security Act — the “CARES Act,” which also brought you those $1,200 stimulus checks — provides an extra $600 per week of unemployment through July 31. Republicans who control the U.S. Senate don’t want to provide an extension.

Standard unemployment payouts vary from state to state, and depending on where you live you may have trouble making ends meet on regular benefits alone.

Here are nine things you can do to prepare for a smaller weekly payout.

Pad your emergency fund while you still can

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While you still have a few weeks left of the $600 bonus, try to set some of it aside to shore up your emergency fund.

Most financial planners suggest putting away enough to cover at least six months of your usual expenses, but whatever amount you can spare right now is OK — especially if you’ve needed to dip in already.

The worst place to park your emergency fund is in a garden-variety savings account that might pay a pathetic 0.01% annual interest. Instead, look for a high-yield account where your savings will accumulate more interest and grow over time, so you’ll have more money available when you need it most.

Rates can vary from one financial institution to another, so be sure to compare your options online.

Cut down on monthly expenses

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Once the $600 bonus ends, you’ll likely have to adjust your budget to compensate. The sooner you can trim down your spending, the easier the transition will be.

Start by making a list of your monthly bills and typical expenses and try to identify areas where you can cut costs.

For example, consider cutting your cable and switching to a less expensive streaming service. If you already use one, consider cancelling it for now and taking advantage of free trial periods.

You can also save a surprising amount on food by preparing your meals at home rather than ordering in. If you use a cash-back card to buy your groceries, you’ll get a bit of money back every time you shop.

Defer payments whenever possible

During the pandemic, a number of lenders, banks and utility companies have been giving customers a break to help them weather the financial strain.

If you’re worried about your ability to make your mortgage payment once your unemployment benefits shrink, you might be able to put your mortgage on hold through what’s known as forbearance. You’re eligible for up to a year of forbearance if you’re dealing with financial hardship and, like most borrowers, have a federally backed mortgage.

When you’re ready to take your mortgage off “pause,” you can make up the back payments in a lump sum, by increasing the size of your monthly payment for a time or by making additional payments at the end of your loan term.

You may be able to defer your car insurance payments as well. If your car insurer isn’t willing to give you a break, it might be time to start shopping around for a better one.

Broaden your job search

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You’ve probably been on the hunt for a new job for a while now, and if you work in an industry that’s been hit particularly hard by the pandemic, your prospects may seem grim.

If you’re not against relocating, you might want to try broadening your search to include positions outside your home state.

You should also consider looking for work outside of your chosen field if you’ve been coming up short with your usual search terms.

The idea of stepping out of your comfort zone may be daunting, but you could be qualified for all kinds of jobs you aren’t aware of. Certain job boards will even use AI technology to match you to new and interesting positions based on your skill set and experience.

Make extra cash with a side gig

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While you’re looking for your next full-time position, you can bring in a bit of extra money by picking up a side gig.

If you can sell your skill over the internet — think about things like copy editing, voice acting, graphic design — a number of digital marketplaces will match you with eager buyers all over the country.

Another option to bring in some quick cash is to sign up for an online rewards program.

You can earn money and gift cards by completing simple tasks like filling out surveys, watching viral videos and playing games on your smartphone. It won’t net you enough to pay your rent, but it may cover your groceries for the week. At times like this, every little bit helps.

Get a break on your student loans

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Most people with federal student loans are already doing this. Automatic payments have been paused until October, and interest rates have temporarily been reduced to zero.

However, if you’ve got debt from a private student loan, you’re still obligated to make your monthly payments. Try to contact your lender to see if you can negotiate a different payment schedule.

You may also be able to shave some money off your payments by refinancing your student loan — that is, paying it off with a new loan that has a lower interest rate.

It’s tough to qualify for refinancing when you’re unemployed, as you generally need to prove steady income. Depending on your situation, you might be able to point to investment income, freelance work or even your unemployment benefits. A co-signer also could help.

If you do qualify, refinancing could save you thousands of dollars in interest over the course of your loan while reducing the time it will take you to pay off your debt.

Consolidate your credit card bills

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If you’ve got multiple credit cards, trying to make the minimum payments on all of them with $600 fewer dollars each week could be a struggle.

You can try calling to see whether you can defer some of your payments, but you’ll probably still be on the hook for the interest you owe. Credit cards come with some of the highest interest rates of any financial product, and since the interest compounds, the amount you owe can snowball quickly.

One option that may help is a debt consolidation loan with a lower interest rate. You’ll be able to pay off all your existing debt immediately and only have a single monthly payment to worry about.

Just like refinancing a student loan, it will be hard to qualify while unemployed. But if you’ve got good credit, it’s definitely worth investigating to see whether you can save some money.

Dip into your retirement accounts

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Although this option should only be used as a last resort, you may be able to steal from your retirement accounts if you’re in dire need.

The CARES Act allows you to make a “hardship withdrawal” of up to $100,000 from your 401(k) or traditional IRA without penalty until Dec. 31, 2020.

You’ll be required to pay income tax on the money you withdraw, but you’ll have a three-year window to do so. Anything you borrow that you put back into your account won’t be counted against your annual contribution limit.

Remember, all of that money sitting in your retirement account may be tempting, but dipping in now could mean retiring years later than planned.

Stay up to date on the government’s relief efforts

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Since the unemployment rate is still hovering around record highs, there’s a distinct possibility that lawmakers may extend the $600 bonus in the coming weeks, before the July 31 end date.

Although no one is sure when (or if) an extension will be announced, you’ll want to keep an eye on the news and watch for any important updates before doing anything drastic.

The last thing you’d want to do is pull from your retirement account when relief might be just around the corner. Explore your other options first so you can hold out as long as you can.

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