The odds are you'll be back to work fairly soon. But there's no guarantee. Especially if you're living paycheck to paycheck, this guide will see you through.
If you’re one of the 800,000 federal employees furloughed from work this week, you may be wondering how you’re going to survive. Those federal workers earned about $1 billion a week, CNN says.
1. Hunker down for the long haul
You’re probably trying to guess how long this shutdown will last. So much is unknown but, if the past is a prediction, it probably won’t last for very long.
The federal government shut down 17 times between 1977 and 1996, The Washington Post reports:
- The last time was in 1996, when government halted twice, once for five days and another — the longest — for 21 days.
- Fifteen of the shutdowns lasted 12 days or less.
- Ten endured just five days or less, and several of those included a weekend.
So, the odds are you’ll be back to work fairly soon.
But there’s no promise. It could go on longer. Congress has become considerably more polarized in the intervening years, meaning that opposing sides can get deeply dug into their positions.
That’s why you should pray for a short end to this thing but plan for a long haul.
2. Figure out what you’re up against
Sit down this minute with a pencil and paper and decide how you’ll pay your bills with no income. This means making a list of your strictly non-negotiable obligations: rent or mortgage, utilities, insurance, garbage removal, car payment, gas and other must-pay fees. Include a modest but realistic monthly budget for groceries.
Add it up. The sum of these expenses is your monthly bottom line. You need this much, at the absolute minimum, to keep your lives going on an emergency basis.
3. Get help
If you’re worried you won’t make it, check out the National Foundation for Credit Counseling’s new program at SharpenToday.org, or call 855-3-SHARPEN (855-374-2773) and ask to talk with a counselor who can help prioritize your bills, cut your spending and possibly negotiate with creditors. You can also search online for a local agency.
Most NFCC member agencies charge nothing, says Gail Cunningham, NFCC spokeswoman.
“No service will be denied based on an inability to pay. Thus this should not be a barrier to someone reaching out for help,” Cunningham said in an email to Money Talks News readers.
4. Don’t panic
If you’ve got a comfortable buffer of savings, proceed carefully but confidently.
The Los Angeles Times explains that there’s a chance that, once you’re back at work, you’ll be able to collect your salary for the shutdown.
The last time this happened, during the Clinton administration, Congress approved retroactive pay. There’s no guarantee, however.
5. Record and tally expenses daily
With savings or none, start immediately making a note of every purchase you make, whether with cash, credit or check. Ask everyone in the family to do the same.
Meet up for 10 minutes at the end of each day and add up your family’s spending. Don’t skip a day or fall behind. This daily accounting will be your road map. It’ll give you a sense of control and the chance to see immediately whether and how to cut spending.
6. Whittle what you can
If you’re seriously strapped, your next task is to trim those monthly expenses for the time being. Start with housing, your largest expense.
If you’re a renter
You probably can’t negotiate your rent down but you might be able to make a drawn-out payment arrangement.
Act quickly. Call to alert the landlord that your job has been furloughed and ask what your options are. Don’t do this, however, if you have reason to believe that discussing it will make things worse with the landlord.
- Contact your state’s human resources offices to see what help is available.
- Call charities (including United Way, Red Cross and other nonprofits and church-based programs).
- Search online for your city’s name and “rental assistance” or “emergency rental assistance.”
- Have a list of your monthly bills and creditors ready and understand that competition for these programs may be intense.
If you’re a homeowner
If you’re going to have trouble meeting your monthly mortgage obligation, act immediately. Don’t wait until you’re in trouble.
Call your mortgage lender to report your job situation. It took lenders a long time after the recession began to respond to troubled homeowners, but now, finally, most are prepared to discuss options with their borrowers. Use this foreclosure prevention contact list from the Mortgage Bankers Association.
MSN Real Estate has more on how to keep your home when you’ve lost income.