The government shutdown earlier this winter left about 800,000 federal workers without pay for weeks. More than half were required to work at least part of that time, without pay. On January 25, an interim agreement reopened the government for three weeks. But, those three weeks are nearly at an end, and many government employees are still awaiting backpay.
While many of those thrown out of work—or required to work without pay—are still working to stabilize their finances, another possible shutdown looms.
Furloughed government employees and those working without pay will eventually be paid, but that’s small comfort when the bills are past-due and the pantry is growing barer. And, many Americans simply don’t have the resources to bridge a multi-week gap in income.
Here are a few tips for recovering from the longest shutdown in U.S. government history and weathering any that may be on the horizon.
Talk to Your Creditors
It’s always difficult to pick up the phone and tell your banker, landlord, or credit card company that you can’t pay your bill on time. But, government workers affected by the shutdown are in a unique position. Virtually everyone in America is already aware of the situation, and the fact that those affected are in this position through no fault of their own. Many companies have even taken the initiative to help. For example, if you’ve logged into your credit card account online in the past few weeks, you may well have seen a message along the lines of “Federal worker affected by the shutdown? We’re here to help.”
Explore what that help might look like, whether it’s skipping a payment or two, suspending interest, or extending you additional credit to help you get through the rough patch. If you’re among the government employees who haven’t yet received back pay, keep in touch with your creditors and make sure they know you’re in the group that’s still waiting and they will receive payment as soon as your funds are released.
Consider Suspending Unnecessary Services and Subscriptions
Eliminating a few small expenses isn’t going to make up for weeks of lost income, but it can help to focus your resources on what matters most. When you take inventory, you may be surprised at how those small items add up. Suspending your HBO subscription, cutting back on the extra data on your cell phone plan, and paring back on similar non-necessities won’t cover your mortgage, but you may find that it adds up to a week’s groceries or covers an essential bill like your utilities or automobile insurance.
Use Credit Strategically
Under most circumstances, living on credit when you’re cash-poor is a bad idea. But, government workers affected by the shutdown know exactly how much money they’ll have coming, which makes smart planning much easier and more reliable. That doesn’t mean you should use credit without restraint, but incurring some short-term debt that you know will be covered by back-pay can help you keep life running smoothly while you wait to return to work (or to being paid for your work). This is especially true if your credit card company is willing to work with you by lowering interest or suspending it for a month or two.
Borrow from Your Thrift Savings Plan (TSP)
Normally, a federal employee must be in “pay status” to borrow against TSA funds. Last week, the Federal Retirement Thrift Investment Board published an interim rule allowing federal employees to request loans while out of pay status if their status changed as a result of a furlough or unpaid work during a shutdown. That creates a new option for federal workers if lawmakers fail to come to an agreement before February 15th.
Stabilize Your Finances as Soon as Possible
One serious mistake people often make when borrowing money or using credit to cover a shortfall in income is failing to immediately put their finances back in order when circumstances change. If you’ve incurred interest-bearing credit card debt, taken out expensive short-term loans, or depleted your emergency fund or savings account to get through those weeks without pay, make sure to pay off the extra debt you incurred and replenish your savings right away when your back pay arrives. Otherwise, you could find yourself in a much more precarious situation when you hit another bump in the road.
When you’ve received back pay, paid off excess debt incurred to cover the gap, restored your savings, and are back to business as usual, think about what you wished you’d done differently when this crisis arose. Even if a compromise is reached and the next shutdown averted, unexpected large expenses or loss of income will happen again. According to a 2018 Bankrate survey, more than 1/3 of U.S. households experience at least one major unexpected expense each year. Careful advance planning can make all the difference.