As the businesses shut down, decrease open hours, and limit the number of customers, the sales decrease and the costs spiral. When a considerable amount of money started draining out of the businesses, the capital shrunk and shut down resulted in millionaires about to get broke. At the last moment, the government announced benefits for the small to midsize businesses that helped them carry on.
Around 80% of the benefit of a change in tax law is going to help millionaires and billionaires. The republicans introduced the new coronavirus relief package, to stimulate the economy and artificially push the economic curve upwards.
Americans are now learning to stretch their dollars, more than ever. Layoffs, furloughs, and cuts in pays due to the coronavirus outbreak, people have been forced to find ways to pay their bills regardless of what they have and don’t.
By the start of April only, around 6.6 million Americans had lost their job and filed for unemployment for the first time. Almost, 10% of the U.S workforce was unemployed within three weeks.
This pandemic is going to stay for as long as we can think of, and everyone has to deal with it. It is survival mode for businesses too.
A whopping 13% of people who lost their income due to the pandemic had enough funds to last them a few weeks. Also, 23% of people had little money to cover monthly expenses, and 25% of people who lost their jobs said, they could only afford essentials for a couple of months. Only 15% and 23% according to the same survey, had enough savings to spend for three to six months.
Although the pays had been reduced and wages were furloughed, there were ways people tried to make both ends meet. Almost everyone with a decreased income had to cut down expenses and bring in more income.
Advantage of Government Benefits
People took advantage of the government benefits and it was the only option for some. Those who had lost their jobs filed for unemployment and in addition to the state benefit, the rescue package offered an additional $600 a week to furloughed or laid-off employees. This benefit will be given to them for up to four months or until they find a new job.
When thousands of people had lost their jobs because of companies downsizing their business portfolios, individuals who had been living beyond their means, faced numerous financial problems when they got unemployed. Although the government announced that such individuals will get $1200 and couples will get up to $2400.
Those earning six-figure incomes and had poor savings were shaken. They had huge spending habits and a monthly budget they could not handle without an income stream. Those with extremely high business expenses also shared similar issues.
During the pandemic, people stayed indoors, which meant saving money they would have spent on happy hours outdoors. It was important to keep a tight budget, especially when the income was halted but those who had a habit of spending money unnecessarily found ways to do what they always did.
Ideally, you should pay the bills that cannot be delayed, pay rent, and buy only the essentials. Many people who had a loan to pay, delayed their payments. The coronavirus relief bill allowed federal mortgages payments to be delayed for as long as one year.
Not Enough Cash
Many people have a habit of borrowing money through a credit card for regular expenses. People who had been spending money borrowed by the bank did not have the cash to pay for things they wanted to pay for.
Because of so many things going on at the same time, it was difficult to cut expenses when required. This drained all the money that people had easily available every month. The cycle of income stopped and many companies owned by such people who were poorly managing their assets filed for bankruptcy.
The last option for many people, who had been in a crucial state was asking for money. Many people asked each other for money and close people like friends, family, or loved ones helped.
Although it was embarrassing for a lot of people and they hated the idea, they had to manage without.