As an African American woman, I am paid 62 cents for every dollar a white man makes in a comparable job. And, because I was responsible for paying for all of my post-secondary education, I incurred and still have a significant amount of student loan debt.
I have always kept a job on the side, a “hustle” job, in addition to full-time work. Whether it’s scoring state math exams, reviewing college application essays for high school seniors, or working retail during the holidays, I used that additional money to make up the difference between what I earned and what I kept.
Last year, I was fired from my “day job” and have since been working hard to turn one of my “hustle” jobs — freelance writing — into my full-time gig. I am eligible for unemployment benefits, and that money has helped keep me afloat while I build my freelance business (something I’d planned to do in retirement, a few years down the road, but my timeline has changed).
The COVID-19 crisis has changed my plans — for the better
We are lucky: The pandemic has not significantly eaten into our household budget because my husband’s job is unaffected; he is able to work from home. We have three children; one is an adult and pays his own rent. Our grocery bill did increase a bit because the other children are at home, their classes switched to online, but this increase has been offset by lower transportation costs.
After housing and food, the majority of our money goes to pay our kids’ undergraduate college tuitions. Having watched the student debt crisis grow to over $1.6 trillion in 2019, we’re doing as much as we can to ensure that our kids won’t enter the job market with a lot of student loan debt.
Because of the recently passed federal CARES Act, which extends unemployment benefits to new groups and adds a $600 weekly increase to state benefits, my unemployment income is set to go up. We don’t need that extra money to pay our bills, so I’ve decided to use some of it to pay down debt. More importantly, though, I’m using it to invest in my freelance writing business.
I’m using a portion of the money to pay down my debt
The CARES Act includes interest and payment suspension for all federally underwritten student loans until September 30. Unfortunately, not all of my student loans are that kind, but I can use the money I’m not spending on my federal loans — as well as some of my unemployment income — to pay down my private student loans.
In addition to the pile of student loan debt, I have some credit card debt and a used car loan. Some of the big bank card issuers, like Bank of America and Citibank, have offered to waive credit card payments and late fees for up to two months, though it seems like a huge hassle to take advantage of that offer. So instead, I’ll keep making my payments and put a little extra towards those debts.
I won’t be investing my extra money in the market
Investing that additional $600 from the CARES Act wouldn’t do much for me. The stock market has been reeling, and given that volatility I plan to simply continue investing in my retirement funds as usual — I haven’t even significantly shifted the mix of my portfolio. I’m playing the long-term dollar-cost averaging game rather than trying to time the market.
Similarly, savings accounts, even certificates of deposits, are only offering returns in the single digits, so I don’t think socking away that extra $600 a week would earn me much in interest.
Investing in my business
The unexpected, temporary increase in my unemployment benefits gives me the opportunity to lower my credit card debt, and pay the student loan bill that isn’t covered by the CARES Act. But more importantly, knowing I will get that money for the next four months means I have one less thing to worry about.
Being broke is a health risk. Yes, there are fruits and vegetables in the house, as well as chips and cookies. Guess what I’m eating? I have pains in my shoulders and hips, probably because I’ve been tossing and turning through the night instead of enjoying a restful seven to eight hours of sleep. Lack of sleep leads to a dull fog in my brain. I watch movies and can’t tell you what I’ve seen, or read the same page over and over.
Now, with the additional benefits, I am looking forward to having less anxiety, more peace, and maybe an apple or an orange. Plus, I can be more creative. Creativity is not a requirement to be a freelance writer, but it is a requirement to be a good freelance writer.