Before we get started, lets recognize that this isn’t the first time there’s been a shutdown, and it probably won’t be the last.
But that doesn’t change the fact that so many workers are now reaching their third week of no pay. There are roughly 800,000 federal employees who are not receiving paychecks right now, many of whom are located right here in the DC Metro area. While some are technically on a “leave of absence”, many are being expected to work for no pay. What’s worse is that federal employees already make, on average, quite a bit less than their private sector peers. On top of this, while most workers are expecting to be paid retroactively once the shutdown is over, it’s not mandatory.
First and foremost, take a look at your monthly budget and find items you can easily remove.
Another helpful tip is to contact your bank. In fact, one institution headquartered here in the DC Metro, Navy Federal Credit Union, is extending a zero-interest loan up to $6,000 with no fees and a grace period. Many banks are willing to make exceptions. Bank of America and Wells Fargo also have outreach programs that assist federal employees. Most institutions have similar processes in place for their employees that allow them to contact creditors and landlords in order to ask for assistance.Another step that federal employees can take is to proactively reach out to creditors. Best move? Develop a simple letter that explains your situation: “I am a government employee who has lost income due to the government shutdown. Due to these events, my income has been drastically reduced for the time being and I am unable to make my payment in full this month.” On top this, don’t forget to include account numbers and contact information with the letter.While filing for unemployment may seem like the best “quick fix”, that isn’t necessarily true. A large portion of these federal employees can apply for unemployment while on temporary leave of absence. Unfortunately, this doesn’t cover everyone. For those who are expected to report to work without pay (as mentioned above), do not qualify for these benefits. In most states (and D.C.), if you collect unemployment benefits, and then receive retroactive your pay, you will indeed be require to repay the government.If you are a government worker who participate in the Thrift Savings Plan, you may take loans from their retirement savings if the furlough is expected to last 30 days or less. You may not take the loan if your leave goes beyond that period. However, remember than once you remove money from your retirement account, that money is no long
invested in the market. You will also be required to repay the money, so this should be used as a last resort.Related:
The Bridge Between Financial Planning and Reduced StressOne last note to keep in mind: Be skeptical about picking up work while you are on furlough. Even though the government is shut down, you are still an employee of the federal government. Because of this, certain employment (outside the scope of your federal job)may be restricted.While these tips may bring short-term relief, the best course of action is to develop a long-term plan for these types of situations. This will be the first time that a government shutdown has extended past two pay periods, making the financial situation for many households that much tighter. No one knows how long the current shutdown will last, or when the next will arise, and that is exactly the reason to be prepared for these types of scenarios.If you are federal employee who has questions about your day-to-day income during the shutdown, and are wanting to talk to a professional, please f
eel free to reach out to us. We are more than happy to assist you in this time of instability.
