There’s a steady stream of COVID-19 news that’s evolving daily. All of that information can be overwhelming, especially as it pertains to your health and finances. To help you sort through it all, we put together a list of buzzwords that you may be seeing in the news so you can learn more about them and how they might impact you.
Furlough is a temporary unpaid leave that some employers may use during times of economic uncertainty, or when their paid staff is temporarily unable to work. Instead of having to let staff go, employers place them on furlough, which means they can still receive certain benefits from their job (healthcare, for example) but for as many days, weeks, or months that they are furloughed, they are unpaid for their work. In simpler terms, an employee can be furloughed one week every month, which means they will receive a partial paycheck that accounts for the other three weeks they were not on furlough. If you are furloughed, you may be able to seek unemployment benefits.
A stimulus package is a government-approved bill that is meant to help both a nation’s economy and its constituents. In the case of COVID-19, Congress passed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) which uses tax rebates, small business grants, student loan relief and additional funding for healthcare to aid U.S. citizens and stimulate the economy during a time of economic hardship. What does this mean for you? A few things, really. If you’re a small business owner, you may be eligible for a forgivable bridge loan, or additional funding for grants and technical assistance. If you’re an individual whose yearly income is under $75,000 (or $150,000 for joint filers), you will receive a stimulus tax rebate of $1,200, and an additional $500 per qualifying child. If you make more than $75,000 but less than $99,000 per year, you may still be eligible for a refund, though it begins to phase out by yearly income. The CARES Act also allows a break on federal student loan payments through September 30, 2020. During this time, there will be no interest accrued on student loan debt through federal programs and there will be no garnishment of wages, social security and tax refunds for student borrowers.
If you or someone you know has lost a job due to the economic effects of COVID-19, you may be eligible for unemployment benefits. Unemployment benefits are available to those who are unemployed through “no fault of your own”, including those who had to quit their jobs due to COVID-19 because they were concerned about their potential exposure to the virus, those who were laid off due to economic implications of the virus, and those who were furloughed, as well. Unemployment benefits come in payments from your state government that pay a percentage of weekly wages. Keep in mind that each state runs its own unemployment benefit program, and percentages and rules differ among them. Go to your respective state’s unemployment insurance program website for more information, or to apply for benefits. Be sure to do this as early as possible. Many states are experiencing long wait times due to the unprecedented influx of new claims.
An interest rate is attached to any loan you receive from a lender. That interest rate is the percentage in which the lender charges as a fee to loaning money to the borrower. In other words, when you take out a loan, the lender will charge you a percentage of that loan for borrowing their money. Interest rates are being discussed at a high frequency lately, because the Federal Reserve has lowered interest rates to ~0%. What does this mean for you? If you have a mortgage or are looking to buy a home, you may want to consider refinancing or purchasing a home while interest rates are low.
Navigate your financial well-being throughout the COVID-19 situation here.