Illustration of a hand holding dollar bills.

The sudden shutdown of much of the U.S. economy during the coronavirus pandemic has choked off income to millions of Americans—sending many scrambling to pay bills and put food on the table.  

Fortunately, some help is on the way. The CARES Act, the $2.2 trillion federal rescue package passed in late March, has begun sending direct cash payments to many Americans, expanding unemployment benefits and offering temporary relief from certain types of debt and financial obligations, among other provisions.

But government help is, at best, only a partial solution to the coronavirus-induced cash crunch. So we’ve put together a step-by-step approach to coming up with funds to get you and your loved ones through this difficult period. 

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The key is to be methodical and strategic.

“In an emergency like this, there’s a tendency to panic, grab the first solution at hand, and worry about the consequences later,” says Bruce McClary, vice president of communications at the nonprofit National Foundation for Credit Counseling and a longtime credit counselor himself. “Instead, take an inventory of the resources you have available before you take the next step.”

You might have more options than you think. 

That said, not everyone will have access to all the tools listed here. We ordered them roughly in what Christine Benz, director of personal finance at the investment research company Morningstar, calls “a hierarchy of least-bad options.”

If you come to one that doesn’t apply or isn’t available to you, move on to the next.

Delay Paying Certain Bills

One of the most effective ways to free up cash is to not spend it on anything that’s less than essential. Business owners and accountants consider this approach a critical tool for staying afloat during lean times, but it can be applied to personal finances as well.

It basically means being judicious about which bills you pay and which you don’t, and in what order, while keeping a close eye on the money going in and out of your accounts and planning ahead. 

That may seem like common sense, or something you already do. But the line between what bills to pay right away and what can wait has shifted dramatically in recent weeks. That's partly because of provisions in the CARES Act and partly because businesses realize they need to help customers get through the crisis.

“Most of the major credit card companies, lenders, utilities, they’ve all offered some sort of special accommodation for people facing COVID-related hardships,” McClary says.

So what bills can you possibly put off paying? 

Start by looking at your housing expenses. A key provision of the CARES Act gives anyone with a federally backed mortgage a temporary break from making principle and interest payments for up to a year. Servicers of many non-government backed mortgages also may be willing to grant similar forbearance periods.

Protections for renters are more limited, but the CARES Act temporarily halts evictions from properties with federally backed mortgages, and several states and municipalities have suspended evictions for a time as well.

For everyone else, McClary recommends contacting your landlord and asking for a hardship accommodation. 

Many states have also barred utilities from cutting off services during the crisis, and many utility companies have announced assistance programs and are giving customers the option of deferred payment plans. To find out whether your utility has such a plan, check its website.

Repayment of many student loans can also be put on hold. The CARES Act automatically suspends monthly payments on federal student loans until September 30, with no interest in the meantime.

New York State, meanwhile, has cut a deal with student loan servicers to give borrowers with private student loans at least 90 days of forbearance with no late fees or effect on their credit reports, and consumer advocates are encouraging other states to follow suit. 

You may also have flexibility on consumer loans. Many credit card companies are offering to lower or waive minimum payments due and late fees for a period of time for people affected by COVID-19.

Citi, for example, will do so for two statement cycles on request. Check whether your credit card provider is offering similar flexibility. If not, consider paying the minimum due amount for a couple of months (to avoid late fees), even if you typically pay off your credit cards in full each month.

Communication is crucial. “None of these programs kick in automatically,” says McClary. “You need to reach out.”

Take Advantage of Aid Programs

Here’s the good news: For an estimated 90 percent of taxpayers, cash is already on the way. The CARES Act directed the federal government to deliver “Economic Impact Payments” to most Americans, regardless of whether their income has been affected by the COVID crisis.

The amount will be based on your 2019 income levels. Single taxpayers who make up to $75,000 (and heads of households who make up to $112,000) will get $1,200; married couples filing jointly who make up to $150,000 get $2,400. The amount is also increased $500 for each child.

People who make more than those amounts may still receive funds, but “phase outs” will decrease the size of the payouts by $50 for every $1,000 of income earned above the thresholds. (So, for example, a single taxpayer with no kids who earns $99,000 or more will get nothing, as will a joint taxpaying couple with no kids who make $198,000 or more.)

You don’t have to do anything to get your payment, but you may be able to speed its delivery. If you filed a 2018 or 2019 tax return or receive Social Security or disability benefits, you’ll get your payment automatically.

If you don't normally file a tax return, use this IRS tool to provide bank or financial account information, and the IRS will deposit your payment directly in your account.

And if you don’t have a bank or financial account, has a list of low fee, safe checkless checking accounts that can be opened online and are available to most consumers. Otherwise, your payment will be mailed to you. 

The CARES Act also expanded unemployment insurance benefits for affected workers. That includes a $600 a week increase for each recipient for up to four months, and an extension of unemployment benefits to workers who are usually not eligible, including self-employed workers, independent contractors, and those with limited work history.

And the federal government is incentivizing states to eliminate any “waiting week” periods that prevent newly unemployed workers from getting benefits right away.

“Nobody should have any qualms about applying for unemployment insurance,” says Richard Cordray, former director of the Consumer Financial Protection Bureau and former Attorney General of Ohio. “That is money that you earned during the many periods of your life when you were employed.” 

And don’t forget community resources like food banks and health care clinics, McClary says. Again, any money you can save by not spending it at the grocery store or on a doctor visit is money you can spend on something else you need.

Tap Non-Retirement Savings

If you’ve had the foresight to build up an emergency savings fund, well, the coronavirus crisis certainly qualifies as a legitimate use.

“That’s the gold standard at a time like this,” says Morningstar's Benz. 

If not, the next pool to consider is any non-retirement savings you might have, including investments in a non-tax-sheltered brokerage account.

If you need to choose which investments to cash out, says Benz, start with short- and intermediate-term bond funds, where the resulting tax hit will be minimal because these investments have generally held up well during the stockmarket downturn (plus you pay taxes on those funds as you go).

Selling stock for cash during the crisis is likely to lock in recent market losses. But if you need to do it, Benz adds, consider stocks you purchased recently, on which you may at least derive a tax loss write-off at tax time.

Another non-retirement asset that some people may be able to tap is a cash-value whole life insurance policy. Your heirs will eventually inherit less if you draw down the cash value, of course, but the withdrawals are typically tax-free up to the amount you put into the policy, Benz says. 

Use Retirement Savings—Warily

Why should you avoid using retirement savings, even during this emergency? One of the standard reasons is no longer relevant—the 10 percent penalty for early 401(k) and IRA withdrawals is suspended due to the pandemic—but others remain in place.

First, you will still have to pay income taxes on most withdrawals, which means you’ll have to pull out more money than you actually need right now. And second, your retirement could suffer disproportionately—not only by the amount you withdraw but the lost earnings on that money, too.

“Don’t use a temporary situation as an excuse to put your long-term financial future at risk,” says McClary. “You might need every penny of that money later on.” 

That said, if you must use retirement savings, do it in this order:

Roth IRA. Because contributions to a Roth IRA are made with post-tax dollars, you can withdraw the contributed amount at any time without paying income taxes or penalties. (You’ll still owe taxes if you pull out any investment earnings before retirement age.)  

401(k) loan. If you need to tap tax-sheltered retirement accounts, taking a loan from your own 401(k) account is the next best option. It’s better than an outright withdrawal because you won’t have to pay income taxes on the amount, as long as you pay it back within a specific period, usually five years. You will have to pay back the loan with interest, says Benz, but you’ll be paying it to yourself. Plus, the CARES Act doubled the allowable size of 401(k) loans, to $100,000.

Hardship withdrawal. Though still a less-than-ideal way to generate cash, the CARES Act did make early withdrawals from 401(k)s and IRAs less painful for anyone whose health or income was affected by the coronavirus pandemic. It eliminates the 10 percent early withdrawal penalty on 401(k) withdrawals up to $100,000 and lets you spread the income tax burden of the withdrawal over three years. You can also repay it within three years, in which case you can claim a tax refund. 

Consider a Loan

If you can avoid taking out a loan, says McClary, you should.

“Borrowing your way through a temporary hardship situation risks putting yourself in an even deeper hole that you can’t dig out of,” he says.

But if you must, do it carefully and in the following order of preference. 

Personal hardship loans. Many financial institutions are currently offering special short-term (meaning a few months to a couple of years) loans to customers affected by the COVID-19 crisis. Some offer relatively generous repayment terms, including low interest or a flat-fee with no interest. Some also promise no debt collection and no negative credit reporting. 

But there are risks involved. Several financial companies, notes CR senior policy counsel Christina Tetreault, require that you agree to automated repayment plans, which could accidentally trigger overdraft fees if you are short on cash. Your best option, Tetreault says, is likely to be a bank or credit union you already do business with.

“And be certain you understand when and how these loans need to be repaid,” she adds.   

Home equity line of credit (HELOC). HELOCs often come with relatively low interest rates, which is why some financial experts say these should be your first fall-back during a cash crunch.

“Particularly if you maintain a good credit rating and have a fair amount of equity in your home,” says Benz. 

If that’s not the case, however, think twice about a HELOC. Benz says less-well-positioned borrowers could be asked to pay high interest rates, and could even risk losing their homes if they can’t make their payments.

Plus, HELOCs generally require a full underwriting process, so if you don’t already have one in place, it’s unlikely to be a speedy source of funds.

Credit cards. With high interest rates and minimum payment requirements that don’t make a dent in the principal amount, credit cards “are the single easiest way to wreck your financial standing,” says Benz. So unless you have a clear idea of how you’ll repay your credit card debts, consider them a last resort.

Pick Up Short-Term Work

Of course, another way to close the gap in your budget is to find some work. Even though the U.S. unemployment rate is spiking, it turns out that a large number of employers are looking to fill jobs.

New Jersey recently launched a COVID-19 jobs and hiring portal that, as of mid-April, listed more than 51,000 jobs at 685 companies in the state. “Did you lose your job or have your hours reduced as a result of COVID-19?” the site asks. “Businesses across New Jersey need thousands of workers for immediate hire.” 

Amazon, meanwhile, announced that it would hire 100,000 new workers and raise the pay of its current delivery workforce. And it’s competitor, Walmart, announced that it planned to hire 150,000 people for full-time, part-time, and temporary positions in distribution centers and fulfillment centers.