
When you lose your main source of income, it’s a shock to the system. Your mind is probably flooded with questions: What comes next? What can I do about money in the meantime?
There’s no denying that disruption in income, like from a job loss, is difficult — and navigating such a situation in any economic climate can feel almost impossible. By having a plan on how to deal with your finances, you can get back on solid financial footing and gain some peace of mind.
As your ally, we’re here to let you know you’re not alone in this. While it may feel like you’re wading into uncharted waters, here are actions you can take now to help you make it through this tough time.
1) Put things on pause.
- Ask yourself if any scheduled major purchases are necessary, or if you can save the money instead.
- See if you can hold off on any unnecessary monthly expenses, like streaming services.
- Take a look at your collective savings and see what you can access readily without financial loss. Try to avoid tapping into long-term retirement funds early, if you can.
- Focus on what you can control, and let go of what you can’t.
You’re stressed, and naturally so. As emotions run at an all-time high, it’s important to keep them in check as much as you can when it comes to finances. It’s all too easy to allow fear or a clouded mind to lead you to make rash decisions with your investments, savings, or purchases. So, if you can, aim to pause on making any big financial decisions for the time being.
While your investment and/or retirement accounts may feel like the best place to reach for cash, avoid pulling out of the market if you can to avoid penalties. Letting your money continue to grow in the market over time will likely be best in the long run.
What you can do is familiarize yourself with any rules tied to accessing your accounts, whether investment, retirement, or general savings. Should you need to access any of those funds, it will be good to know which ones are easily accessible (and whether any need to be more accessible than they currently are).
At this time, you’ve got a lot on your plate. So, focus on the things you can handle day-to-day, and cut yourself some slack when it comes to what is out of your control.
2) Handle the immediate paperwork.
- File for unemployment benefits.
- Review your severance agreement, if you have one.
- Explore your health insurance options.
When you’ve suddenly lost your job, it can be overwhelming to know where to begin, but by knocking out a few tasks, you can begin to focus on the future. You’ll probably want to start by filing for unemployment benefits. These benefits may take some time to kick in. The sooner you can go to your state’s Department of Labor website and submit your unemployment paperwork, the better.
You’ll then want to review your health insurance options. See if you qualify for Consolidated Omnibus Budget Reconciliation Act (COBRA), a law that allows you to remain on your employer’s health insurance for a period of time after being laid off. If not, you may be able to join your partner’s plan or your parents’ (if you’re younger than 26 years and depending on which state you live in). When these aren’t options, you might consider looking into the Affordable Care Act (a.k.a. Obamacare) or Medicaid.
Finally, if you have a severance agreement, take time to review it thoroughly. You’ll want to know exactly how much and how long you’ll continue to receive income or benefits, if at all.
3) Contact those you owe money to and ask for assistance.
- Contact service providers for utilities (like electric, internet, phone), your doctor or other medical provider, etc. to see if you can set up a deferred or minimum payment plan.
- Check with all your bank, creditors, or lenders to inquire if they offer relief for those experiencing financial hardship.
Many banks and lenders help those experiencing financial hardship by providing relief or assistance programs. If you are concerned about making your monthly payments for student loans, a mortgage, a car loan, or your credit card, it is worth giving your bank, creditor, or lender a call and asking if they’re willing to waive monthly fees or defer payments.
Especially during this time surrounding COVID-19, many financial service providers are offering relief packages and payment deferment options. Learn how Ally is supporting communities during COVID-19 here.
The same goes for bills like water or electric, as well as phone or internet and medical providers. You may be able to work with them to set up a payment plan that is more manageable for the time being.
4) Review and revise your budget.
- Take a hard look at your expenses.
- Revise or create your budget to adjust for changes in income.
- Review your budget often (weekly or bi-weekly).
When you experience a loss of income (or other financial difficulty), it’s critical to reassess your budget, and you might need to make some pretty big cuts. It may be a tough step to get through, but having a revised budget in place should help you feel like you have a plan.
Cutting out expenses like a gym membership, haircuts, or dining out might feel obvious. But you may need to take a close look at other costs, like streaming subscriptions, cable, or other non-essential things that can chip away at your money.
Aim to assess your budget weekly, and while you want to be realistic, try to be as detailed as you can when planning for things like groceries, gas, utilities, and other needs — creating a list, especially for grocery-shopping, and not budging from it will help you stick to only buying necessities.
You may want to try a zero-based budgeting strategy. With a zero-based budget (a.k.a. zero-sum budget), each penny has a purpose. Your goal is to make your income minus your spending — which includes debt repayments and what you put (if anything) into savings — total zero. While this method can take a lot of effort and attention, it is great for keeping a close eye on your money, knowing exactly where everything is going, and preventing you from overspending.
Related: Lule Demmissie discusses how to prepare if you’re concerned about losing your job.
5) Consolidate or refinance debt, if necessary.
- Consider consolidating debt, if you are repaying several loans or have high-interest debt.
- Think about refinancing your home mortgage, if you can get a better interest rate.
You’ve examined your financial situation and reviewed your budget. But even after checking with your bank or loan lenders, you might still be concerned about making debt payments. If that’s the case, you might consider debt consolidation.
Debt consolidation lets you roll high-interest debts (like credit-card debt) into one, lower-interest payment. It can help you reorganize your financial obligations, lower your total interest paid, and remove the hassle of having several, separate loans to repay. Do your research on all the alternatives (like deferral options or increased monthly payments) before jumping into debt consolidation. For instance, if you plan to continue to use your credit card after consolidating, this option might not make sense for you.
During this time, you might also think about refinancing your mortgage if you have one. Depending on your circumstances, you may be able to get a better rate on your home loan, making monthly payments more manageable and saving you money in the long run. Be aware that the refinancing process can have pricey upfront costs, so you’ll want to weigh the pros and cons first.
There are plenty of trustworthy websites to help you gather information before you jump into consolidating debt or refinancing. For example, the Consumer Financial Protection Bureau (CFPB) provides guidance on many debt-related topics; the Internal Revenue Service (IRS) answers questions about taxes when accessing an IRA early; and the Social Security Administration offers valuable information on disability and insurance. As with anything, it’s helpful to first do some research.
6) Be kind to yourself.
- Allow yourself time to reflect and process your emotions.
- Don’t be afraid to ask for help or take advantage of assistance and relief programs where you can.
- Remember you aren’t alone in this experience.
Finding yourself in sudden financial uncertainty or losing your job is a lot for anyone to take on. So, allow yourself to be upset, frustrated, or sad, and take the time you need to reflect on your experience and to work through your emotions. Nobody is expected to bounce back in one day — or to do it alone, which is why we’re here to help you.
While you can take several steps to get a handle on your finances during this time, it’s okay to pause for a moment when you need to or reach out for help, if you need it — call friends, spend time with family (or by yourself, if that’s more helpful). And remember, you’re not alone, and you don’t have to come up with all the answers yourself. Don’t be afraid or embarrassed to lean on available assistance from wherever you can: That is what it’s here for!
The most important thing you can do is take care of yourself and aim to keep your gaze forward on the future, because this won’t last forever. And we’ll be your ally throughout everything — to help you through all the financial ups and downs, whenever you need.
Originally published April 2020
Comment on this article
Comments
Mary B. on May 7, 2020 at 1:10pm
Due to corona I am going through hardship. Please work with Me.
Ally on May 7, 2020 at 1:12pm
Hi Mary, we’re committed to supporting our customers during the COVID-19 crisis. You can learn more here: https://www.ally.com/coronavirus-response
Fekadu on May 8, 2020 at 4:37pm
Excellent customer serves.Thank you so much
Ally on May 8, 2020 at 4:40pm
We love hearing this! Thanks for the comment.
Shirley S. on May 8, 2020 at 5:08pm
Thank so much for the the information, it was very helpful, it is so nice to know someone care Your input has taken a lots of stress of the moment, I know things will be back to normal soon,
Ally on May 8, 2020 at 5:09pm
Thanks for the comment, Shirley.
Lovell J. on May 8, 2020 at 6:07pm
I really appreciate y’all working with your Customers
Ally on May 8, 2020 at 6:08pm
We love our customers Lovell! Thanks for the comment.
Teresita on May 8, 2020 at 6:56pm
Thank for your helping us to better our understanding during this top time.
Ally on May 8, 2020 at 6:57pm
We’re so happy you found this article helpful, Teresita!
Willamae M. on May 8, 2020 at 8:38pm
Thanks for your concern ❤️
Mary R. on May 9, 2020 at 1:46am
This was a well thought out article ,and very educational.
Ally on May 9, 2020 at 1:48am
Hi Mary, we love comments like this! Thanks for reading.
Brian h. on May 11, 2020 at 11:18am
After Ally called me about my new truck payment being deferred because of my job laying me off,(which is the first time ever). I felt a real sense of relief. Thank you for the help. Been telling all my friends and family about what a great institution I have on my side. Sincerely.
Ally on May 11, 2020 at 11:19am
Hi Brian, thank you for the comment and for being an Ally customer.
Candice F. on May 15, 2020 at 5:00pm
This is so helpful and a real stress-reliever. I truly feel better after reading it.
Ally on May 15, 2020 at 5:01pm
We love hearing this, Candice. Thanks for reading.
Patty on May 15, 2020 at 5:11pm
I was just wondering if we've done a deferment on our auto loan but I deferment is only till I'm not sure if it's the end of June or the beginning of July and not sure if my job is going to be reopening or not not sure what's going on with this whole pandemic but is there a way to push the payments out longer or not?
Ally on May 15, 2020 at 5:13pm
Hi Patty, if you’ll give our team a call at 1-888-925-2559 or chat with us online at ally.com, a team member would be happy to look into your specific account further and advise.
Janet on May 15, 2020 at 6:11pm
would it be possibly to be able to deferred payments on my car for a couple of months
Ally on May 15, 2020 at 6:13pm
Hi Janet, you can learn more about how to get started here: https://www.ally.com/coronavirus-response. You can also defer your Auto payment online at ally.com/auto – just log in with your username and password.
Rena on May 15, 2020 at 9:36pm
This was very helpful right now my biggest stresser is paying my car payment it's high after losing a big chunk of my income because of covid 19 things are a little rough but I will persevere .Thank Ally for always understanding and being very helpful.
Ally on May 15, 2020 at 9:42pm
Thank you for the comment, Rena! 😊
Adel on May 15, 2020 at 9:58pm
Thank you very much we all trying our best
Mr. F. on May 15, 2020 at 11:00pm
How about giving us some DECENT interest on our many billions of collective savings dollar money on deposit to your ALLY bank which you are USING and investing to make even bigger money ? I have a high 6 figure $ amount in a number of ALLY Bank accounts - and when my current over 2+ % interest ALLY CD's expire at end of this year you will be giving me instead (and by then, expected by next year) interest crumbs for my retirement-needed investment (read INTEREST $$) income,. I have already super economized thru the years but by next year your then expected quite lower interest rates will cost me nearly $9,000 ANNUAL LOSS of annual retirement income. What are YOU going to do about that loss for me ?? You have no brick and mortar bank branches nor the expenses (rent/ mortgage, utilities, taxes, insurance, maintenance, etc.) to maintain same all over the USA, unlike other "brick and mortar" banks. Other banks that HAVE branch offices I can obviously see may need to present
Penny on May 16, 2020 at 6:46am
Due to Corona I am furloughed. I'm thinking of trading in my car and purchasing a less expensive car. Because my car is worth less than my loan, a trade will still require a new loan. Will Ally grant me a new loan while on furlough? I have had a relationship with you for several years.
Ally on May 16, 2020 at 7:01am
Hi Penny, there are many factors that determine whether you qualify for financing through your dealership and Ally. To learn more, visit your local dealership and they can walk you through your financing options. Find a dealer near you using Ally’s Dealer Locator tool here: https://www.ally.com/auto/dealer-locator/
More p. on May 16, 2020 at 8:57am
I was expecting this article more personal or more directed to ally's debtors, I was expecting to tell me call us to this phone number and we will lower your rate because you have been a good client, or call us and we can reevaluate your loan without run your credit, really this writing do not say nothing new.
Elsie on May 16, 2020 at 9:20am
This article was very helpful I forget others was going through with this situation also .I was able to think with all the information provided
Marika C. on May 16, 2020 at 8:43pm
Hello Can you help me with my car payment? Can you delete the 5.5 percent you are now charging. I have 3 years of payments left. Thank you for your help Marika
Ally on May 16, 2020 at 8:45pm
Hi Marika, please give our Ally Auto team a call at 1-888-925-2559 or chat with us online at ally.com so a team member can look into your specific account and advise further.
Dana B. on May 16, 2020 at 9:30pm
I had a bad surgery and need help me with My car accident payments
Sue on May 18, 2020 at 6:11am
Best company ever!!!!
Ally on May 18, 2020 at 6:13am
Thanks for being an Ally customer, Sue! ❤
Amy on May 21, 2020 at 6:36am
Make my portfolio rise to 95,000
yuki on June 1, 2020 at 1:51pm
hi,good morning.i have auto loan to operate tour and travel business. we have 0 income since mar.15.2020. how long can i postphone the payment? looks like we dont get traveler till dec.2020 due to coronavirus and recent LA riot
Ally on June 1, 2020 at 2:14pm
Hi Yuki, if you’ll give our team a call at 1-888-925-2559 or chat with us online at ally.com, a team member would be happy to look into your specific account further and advise.
Judith on July 3, 2020 at 5:26am
Very inspiring
Ally on July 5, 2020 at 9:13am
Hi Judith, thanks for reading.
Linnette H. on July 17, 2020 at 1:22pm
I have been going through a financial hardship please help me thank you.
Karal on September 30, 2020 at 9:02pm
`+I find my sself and family struggling. We ha houses that need refinace to lose. My momis such a lving and dedicted mom please give me reouces to hel I am not looknh for a hand out I will asss we
Beverly O. on October 18, 2020 at 7:00am
I really appreciate you working with your Customers thank you
Ally on October 18, 2020 at 7:48am
Thanks for the comment, Beverly. ❤
Tenneh M. on November 18, 2020 at 5:42am
I appreciate the information that Ally has provided. This year has been and continues to be so very challenging for me financially. After a martial separation in May, I am literally living from hand to mouth and it's extremely stressful. I will definitely use many of the suggestions Ally has provided. Please, continue providing information that will assist many of us through these tough times. Again, thank you.
Ally on November 18, 2020 at 8:33am
Thanks for reading, Tenneh.