Best Practices

I Lost My Job and Have No Money: How Do I Pay My Bills?

by Ana-Maria Sanders   May 13, 2022

As of March 2022, the national unemployment rate in the United States was at 3.6%. Although this number has significantly declined from a year ago, many individuals are still struggling because they were laid off due to the COVID pandemic and cutbacks.

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Unfortunately, losing your job and struggling to find a new one can significantly impact your physical and mental health. Financial stress is sadly a reality for many American families. However, there are some ways you can make ends meet while you search for a new job.

Apply for Unemployment Benefits

Close up on unemployment benefits paperworkThe number one source you could turn to if you lost your job and need money is unemployment benefits. However, there are some eligibility requirements regarding who is approved for unemployment. First, you must be employed for a specific period of time and meet the wage requirement. Second, the loss of employment must result from termination for a just cause or because you quit.

Typically, individuals who were let go due to downsizing or lack of available hours are eligible to apply for unemployment benefits. If approved for unemployment benefits, you may receive a portion of your salary for up to 26 weeks. The amount you may be eligible for depends on the state you reside in and how much you made while you were employed.

Additionally, approved individuals must submit regular reports regarding their employment status and non-government income. Individuals must also state whether they can work and are willing and ready to accept immediate work. These reports are necessary to continue receiving unemployment benefits.

Apply for Government Assistance

In addition to unemployment benefits, many individuals who lost their jobs and have no money to cover necessities can turn to government assistance programs. These programs can help with groceries, rent, bills, and health insurance.

Temporary Assistance for Needy Families (TANF)

Qualified individuals for TANF receive assistance with food, housing, home energy, and childcare costs. Additionally, the program offers job training to help families find work and achieve independence.

To be eligible for TANF, individuals must meet federal and state requirements. First, applicants must be unemployed, underemployed, or have a very low income. Additionally, applicants must also meet one of the following criteria:

  • Be at least 18 years old and head of the household
  • Have a child under 18 years old
  • Be pregnant

Supplemental Nutrition Assistance Program (SNAP)

SNAP helps families by supplementing their grocery budget. Eligibility depends on the size of the family and income. To qualify, the household income needs to be below 130% of the national poverty line. Additionally, the amount a family receives depends on the household income and the state. On average, a family of three receives around $500 per month. Unemployed individuals who don’t have dependents may still be eligible for three months every three years.

The funds can be used to purchase food items from retail stores and some restaurants. However, SNAP benefits cannot be used to purchase alcoholic beverages, vitamins, medicine, nonfood grocery items, or household supplies.

Low Income Home Energy Assistance Program (LIHEAP)

If you’re unemployed and can’t pay bills, you may apply for LIHEAP to help cover energy costs, such as paying bills, weatherization, and minor energy-related home repairs. Qualification requirements vary by state; however, most families that are eligible for SNAP or TANF may also be eligible for LIHEAP.

Eligibility for LIHEAP is based on income and household size. For instance, the maximum qualifying income for a family of four is $41,625 annually. If you don’t qualify for LIHEAP, you can contact your service provider to see if they can offer an extension or an installment plan.

Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)

Pregnant woman grocery shopping Unemployed expectant mothers can apply for WIC to receive assistance with food and healthcare costs. Pregnant women also have access to parenting and counseling classes through WIC. To be eligible, you must be pregnant, nursing, or up to six months postpartum with children under the age of five.

Additionally, the WIC program has income requirements. The applicant’s income needs to be below 100% to 185% of the federal poverty line. Expectant mothers who already qualify for TANF and SNAP may automatically be eligible for WIC.

Medicaid and the Affordable Care Act Health Insurance Marketplace

Many individuals receive healthcare coverage from their employer. As such, if you’ve been laid off recently, you may have lost your source of income, as well as healthcare coverage for you and your family.

Low-income families can apply for Medicaid, which is a public program that offers health coverage. Eligibility for Medicaid is largely income-based. Generally, families and individuals need to be 100% to 200% below the federal poverty line to qualify.

Unemployed individuals can obtain health coverage through the ACA. The ACA aims to provide affordable health insurance to uninsured individuals. Additionally, the program offers subsidies for individuals that have lower incomes.

Lifeline

With the Internet age, dependence on mobile phones has skyrocketed. However, affording wireless services may be challenging for newly laid-off individuals. The Lifeline program offers qualified individuals and families assistance with paying for landline and wireless phone services. Some may even be eligible for a free phone.

To qualify, income must fall 135% below the federal poverty line. Additionally, if you already qualify for SNAP or Medicaid, you may automatically be eligible for Lifeline.

To search for government assistance programs available to you, browse the U.S. government website.

Freelance

Freelance video editor working from home office If you have lost your job due to the company going under or downsizing, you may be able to utilize your high-income skills as a freelancer until you secure another full-time position. For instance, some of these high-income skills may include software engineering, graphic design, coding, and video editing.

Upwork and Fiverr are among the most popular freelancing sites that you can get gigs through. Many individuals post examples of their work to gain interested clients. These sites also offer you the flexibility to set your own rates and hours.

401(k) Loans

Although 401(k) loans are typically reserved for current employees, there may be some alternatives for unemployed individuals. If you can’t find a job and need money for immediate necessities, you may qualify for a hardship withdrawal. You will need to meet specific requirements and provide evidence of immediate financial need. These circumstances include:

  • medical expenses
  • purchase of a residence aside from mortgage payments
  • eviction or foreclosure prevention
  • home repair costs
  • costs related to losses incurred at residence or work due to a federal emergency

There are additional rules regarding hardship withdrawals that you would need to consider, such as:

  • the minimum requested amount is $1,000
  • you can only receive two hardship distributions per plan year
  • you can only withdraw funds that you have invested as a salary contribution
  • the requested amount cannot exceed the amount needed to relieve hardship
  • you must have an immediate need even if the hardship was reasonably foreseeable or voluntary

Also, keep in mind that hardship withdrawals are subject to income tax and a 10% early withdrawal penalty. Lastly, the hardship distribution cannot be repaid to the 401(k) account, so the amount in the account will be permanently reduced.

Sum Up

Research has found that 60% of individuals experience anxiety due to decreased financial security. Surely, this is true of individuals who have recently been laid off. However, despite the overwhelming feeling, you are not completely out of options or money.

The first step is to apply for unemployment benefits, followed by government assistance programs. This aid will usually last several months, giving you time to search for new employment and get back on your feet.

Ana-Maria Sanders, author at OpenLoans
Financial Analyst
Ana-Maria Sanders writes about consumer and business finance. She has been featured on Business.com, CreditCards.com, FOX News, and FOX 29.
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