How to Manage Your Finances During a Furlough
A furlough is an action of placing an employee in a temporary nonduty and nonpaid status because of lack of work or lack of funds. There are two main types of federal government furloughs — a “shutdown” furlough and a “save money” furlough. We are currently experiencing a partial government shutdown furlough, and it’s hitting some federal workers pretty hard.
With no immediate end in sight for the partial government shutdown, more than 800,000 federal workers nationwide will receive NO paychecks today or possibly not for the next payday either. This will be the first payroll distribution affected by the shutdown and many people fear there will be more. Many workers aren’t sure how they’ll make their mortgage payment this month or what will happen when they miss their car payment because they can’t afford it. This furlough has got a lot of people scared about their finances and their financial future.
The Federal Reserve Board has recently reported that nearly 4 in 10 Americans are unable to cover a $400 unexpected expense. This means that some of the furloughed federal employees have likely exhausted all of their cash reserves in order to stay afloat. Also, not all impacted federal workers can rely on retroactive pay after the shutdown is over, which means many people will have a long and tough road to complete financial recovery.
Here are some tips to help offset the financial damage:
- Contact your creditors NOW – This is the first and most important step! Don’t put this off because debt can spiral out of control much faster than you think. We see this happen all the time being in this industry. Waste no time reaching out to ALL of the creditors you owe before payments are missed. This includes credit cards, car loans, student loans, mortgages, etc. Although the Office of Personnel Management provided access to sample letters, a more personal approach to this critical step can be extremely helpful and productive.
- Switch to an emergency budget – Advantage CCS offers a free Budget Builder tool that can help you create an emergency budget in minutes. You need to create a “bare-bones” type of budget with just the essentials Think about “wants” versus “needs” because this is that important. Visit: http://onlinebudgetadvisor.com/budget-builder.html
- Reach out to some local community resources – Charities, nonprofits, and even commercial businesses are all pitching in to provide a variety of support. Don’t be afraid to ask for some help. You can get FREE professional financial assistance from Advantage CCS. Our highly-trained certified credit counselors are standing by to help anyone who needs it. We’ve been assisting clients with their financial problems for over 50 years. Visit us online at https://www.advantageccs.org or give us a call toll-free at 1-866-699-2227. We’re here to help!
Additional Information About Creditor Assistance –
Bank of America and Chase have established special toll-free hotlines. Bank of America is 1-844-219-0690 and Chase can be reached at 888-356-0023. If you are a customer of these two lenders, then please give them a call right away.
Wells Fargo has a special website at https://www.wellsfargo.com/help/government-shutdown/
Bank of America, Chase, Navy Federal Credit Union, and Wells Fargo have all offered support to federal employees by including fee refunds or waivers, loan modifications, and repayment plans to help with the looming financial burden.
For federal workers who have direct payroll deposit, Wells Fargo will automatically reverse monthly service and overdraft fees so you won’t get hit with those right now. Chase also announced a similar plan, but you need to call them and let them know you are currently furloughed.
Navy Federal Credit Union is offering 0% interest loans for up to $6,000 with a grace period.
This is by no means a complete list and details are subject to change as the shutdown continues. Do some research and find out what kind of help or assistance is available to you. Ask questions and talk to financial planners. You can lessen the financial damage if you are proactive.
Here’s a link to a news segment featuring The National Foundation for Credit Counseling (NFCC) and some tips for furloughed federal workers. The story aired on a CBS affiliate in the Washington, DC area Monday evening and Tuesday morning. In addition to some great and helpful tips, the video also features comments from some people impacted by the shutdown: https://on.wusa9.com/2sgJwrR
Advantage CCS offers many free services that can help furloughed federal workers. Please contact us today, and we’d be happy to assist you in any way we can!