All of us are eagerly waiting to welcome and embrace 2021. We're counting the days to bid adieu to 2020. What a year it had been. Unemployment, pay cut, hour cut, death tolls, financial crunch, social isolation, political upheavals, and election turmoil were the top news stories of the year.
On one hand, we are all waiting for the end of 2020. But on the other hand, some people are dreading the end of 2020. Trump's pandemic relief programs are going to end on December 31, 2020. That includes the CARES ACT and other debt-relief measures that Trump brought into the country using his executive powers.
There are many allegations against President Donald Trump, but one thing is for sure, he did try to help the Americans through the CARES ACT and the various other economic relief measures. President Donald Trump introduced the $2.2 crore CARES Act with the onset of COVID-19. Honestly speaking, 13 million Americans survived 2020 with the support of unemployment benefits, student loan forbearance, suspended evictions, and so on. However, a few pandemic relief programs are all set to expire on December 31, 2020. Let us find out how many programs are coming to an end this year.
1. Paid sick leave: The Families First Coronavirus Response Act was implemented earlier this year. The Act instructed employers to give paid sick leave to employees who are somehow affected due to the coronavirus. As per the prediction of the Center for American Progress, the benefits are going to end on the last day of December.
Around 60.5 million workers in the private sector will have to make a tough choice between taking care of their family members and going back to work. They will not get emergency paid leave anymore.
Nobody knows what will happen to the workers in the private sector. As per the reports, vaccination has started from mid-December. But is that enough to give protection to the employees who are already suffering due to the pandemic? I have my doubts.
2. Pause on student loan payments: Payments on federal student loans are paused from March 2020. It isn't that the Federal government isn't making payments on your behalf. It is just that you do not have to make payments until December 31, 2020. The interest rate is kept at 0% at this point. Your loan will be considered current in your credit report.
From January 2021, you have to start making payments on student loans. So, the honeymoon period is going to be over soon.
3. Suspension of evictions: The Center for Disease Control has forbidden landlords from evicting tenants who couldn't pay rents until December 31, 2020.
The government has not yet proposed a rental assistant plan or given an extension for the tenants. So, chances are high that there will be evictions during the mid-winter.
4. Unemployment benefits:Unemployment benefits were the lifeline for millions of workers in 2020. The CARES Act offered $600 per week to unemployed workers in addition to state unemployment benefits. The original program expired in July 2020. But the federal government extended it for another 13 weeks. It was called the Pandemic Emergency Unemployment Compensation (PEUC). The program offers unemployment benefits to independent contractors and also gig workers.
Pandemic Emergency Unemployment Compensation will expire on December 31, 2020.
5. Emergency retirement account withdrawals: The CARES Act allowed you to withdraw money from your retirement savings account under the following circumstances:
You don't have to pay any penalty for withdrawing money from your 401(K) retirement savings account due to coronavirus related issues. You can repay the tax bill in installments over the next three years. You can borrow up to 100% of your balance when you are infected with Covid-19. You can repay the amount within five years. However, you can withhold payments for a year.
You will not be able to withdraw money from your retirement savings account without any penalty from January 2021.
6. Relief on paying utility bills: With the onset of the pandemic and social isolation, thousands of people lost jobs and went into economic hardship. Several states passed legislation to help people in various ways. For example, some legislation instructed the utility companies to stop disconnecting lines in the event of payment defaults. Some municipalities even asked the utility companies to offer assistance programs to people.
There is no fixed date on which the program will end in all the states. It will vary from state to state. So, it makes sense to enquire and ask the utility companies about it.
Now that the Covid-19 relief programs are coming to an end, it's time to take some proactive steps to safeguard your financial life. Here are a few steps that you can take now.
1. Make extra payments on your student loans: Remember, the interest rate on student loans is zero right now. If you have extra cash, then try hard to repay your entire balance within December 31, 2020. Even if you can't pay off the full amount, you can chip away the principal balance to some extent. From January 2021, the interest rate will kick in again.
If you do not have money to make student loan payments, then you can try out a couple of options.
You can apply for income-driven repayment plans.
You can apply for unemployment deferment.
You can consolidate your private student loans.
2. Settle your credit card bills:The CARES Act mandated that lenders have to report your accounts as current even if you skipped payments. You can enjoy this benefit as long as you are not already delinquent.
You can get free credit reports until April 2021. Check your credit report to find out the status of your account. If you have cash, then settle your credit card bills now instead of wasting it on holiday gifts. You have to make credit card payments sooner or later. The idea is to work out a payment plan with creditors before the CARES Act ends and the lenders start reporting missed payments on your credit report. Read also: Which Debt To Pay Off First During COVID-19?
3. Apply for the housing programs:If you have not paid rent in the last few months, then you can apply for the local and state housing programs. They might help you pay your rent provided they have available funds.
Help may be found through state or local housing programs for nonprofits if, after eight months of pandemic-related hardship, funds are still available. Otherwise, you can settle your rents with landlords before eviction. If you can settle your rent before it is too late, then you might be able to avoid having late payments on your credit record. You can also apply for rental assistance programs in your state.
3. Apply for the housing programs: If you have not paid rent in the last few months, then you can apply for the local and state housing programs. They might help you to pay your rent provided they have available funds
Help may be found through state or local housing programs for nonprofits if, after eight months of pandemic-related hardship, funds are still available. Otherwise, you can settle your rents with landlords before eviction. If you can settle your rent before it is too late, then you might be able to avoid having late payments on your credit record. You can also apply for rental assistance programs in your state.
4. Seek financial advice:With the political turmoil going on in the US, another CARES Act is less likely to happen soon. If you have already exhausted your unemployment benefits, then you are in troubled waters. You can apply for unemployment benefits with the state and local governments. Plus, you can call 800-530-OVLG and get help with budgeting and bill payments. You can get free financial advice with regards to how to pay your bills with limited money. You can also do a side hustle to accelerate your income.
5. Withdraw money from the 401 k plan: While it is not advisable to withdraw money from your retirement savings accounts, you can do it if there is no other option. Take out money from your 401 k account before December 31, 2020, if you need it.
Tough time awaits for Americans in 2021
Nobody knows what will happen after Joseph Biden is sworn in as the 46th President of the US. With a spike in Covid-19 cases and the withdrawal of all the pandemic related benefits, it can be said that a tough time awaits for the Americans. Will there be another economic relief plan? Nobody knows. But Americans don't need more economic relief plans from the government. Let's see what happens next.