As President Donald Trump and Congress remain locked in a standoff over funding for Trump’s border wall, the US government shutdown entered its 24th day on Monday. According to the Senate Appropriations Committee, about 420,000 employees are working without pay while another 380,000 are at home on furlough. And while last Friday was payday for those 800,000 workers, there was no salary. DC and Maryland officials says NPR that at least 7,000 unemployment claims have been filed by federal workers and contractors in recent weeks. As the shutdown, which as of Saturday is the longest shutdown in US history, enters its fourth working week, that number is expected to rise.
Going without a paycheck is a struggle for a large number of affected workers, many of whom live paycheck to paycheck. They are not an anomaly in the United States According to a 2018 report from the Federal Reserve“Four in 10 adults in 2017 would borrow, sell something, or be unable to pay if faced with a $400 emergency expense.”
Many workers who are not being paid during the shutdown are based in or near Washington, DC – where the cost of living is high. In April of last year, the Federal Wages Council said wages for federal employees are nearly 32% lower than those of similar workers in the private sector. And although some government jobs pay better than those in the private sector, the salary is not much higher, according to Congressional Budget Office analysts from 2017.
Going without two weeks’ pay as the bills pile up could be well over $400. To help its members, the Coast Guard Support Program released a five-page tip sheet that recommended those who weren’t being paid to hold a yard sale or find temporary jobs as walkers. dogs, babysitter or mystery shopper. advice sheet, first reported and published by the Washington Postdrew some reviews but financial experts polled by Marketplace said the tips listed aren’t really bad advice.
“Generating extra income by selling unnecessary items or working on the side is good advice anytime, not just when you’re in financial trouble,” Greg McBride, chief financial analyst at Bankrate.com, told Marketplace. “That’s probably not the advice people want to hear, but that doesn’t make it bad advice.”
Manisha Thakorvice president of financial education at Brighton Jones, agrees.
“In fact, I think this tip sheet is packed full of sound financial advice. Is everything fun to do? Certainly not! But then, a leave from work is not a fun situation – financially it can be a very serious situation,” she said.
Here’s the advice they and other financial experts have given government workers as the shutdown continues.
“If you need cash in a panic, try to resist the urge to use a credit card — which can end up costing you in the long run,” said Priya Malani, founder of Stash Wealth. . “Your best bet is to call the companies where you have bills due and explain your situation. Often they will be able to offer you the most cost-effective short-term solution.”
As the government shutdown neared the end of its third week, U.S. regulators such as the Federal Reserve, the Consumer Financial Protection Bureau and the National Credit Union Administration issued a statement urging financial institutions to work with customers affected by federal government shutdown.
“While the effects of the federal government shutdown on individuals are expected to be temporary, affected borrowers may face temporary difficulties in making payments on debts such as mortgages, student loans, auto loans, loans commercial or credit cards, the statement read. “As they have done in previous shutdowns, the agencies are encouraging financial institutions to consider cautious efforts to modify the terms of existing loans or extend new credit to help affected borrowers.”
According to McBride, creditors like mortgage lenders and auto lenders should be your first call, as they tend to report late payments to the credit bureaus.
“Explain your situation to see if there is a grace period or an arrangement they can find,” he said. “Try to make sure they don’t report you to the credit bureaus as a delinquent. This is a high profile stop and you won’t be the first to call and ask, but it’s worth getting a head start.
“In general, when your income drops or stops for a while, it’s important to keep flexible spending in mind,” Malani said. “Flexible spending is those lifestyle-enhancing things that we never WANT to reduce – think dining, entertainment, shopping, gym membership, boozy brunch, etc. However, if necessary, reducing flexible spending can help you avoid overspending when your income drops.Don’t be afraid to call memberships like gym memberships, Rent the Runway, etc. and tell them your situation. They often let you pause your subscriptions for a few months without penalty and we’ve even seen companies continue to provide full benefits to government employees during the shutdown. It never hurts to ask.
Financial experts said to reduce these costs, unfortunately even if these things are what makes you happy during this difficult time.
“The absolute WORST thing anyone can do — whether it’s this shutdown or just losing a job in general — is to continue living the same way you’ve been,” Thakor said. “It’s so easy to want to do this because you’re probably very emotional about this situation – feel everything from anger to [being] overwhelmed with pure and simple fear. To calm down, it can be easy to justify spending by saying, “It’s such a @[email protected]# time, I’m going to treat myself.”
However, you will probably regret this decision later, when your debts and expenses pile up.
“The second worst thing is keeping to yourself the fact that you’re going through this — especially if you’re asked to do social or other activities that will cost money,” Thakor continued. “You may feel embarrassed not to say it’s not a good financial time to participate. But being honest not only frees you from yourself, but who knows – maybe your working friends are also struggling financially and by mentioning it, it’s a blessing because you’re helping them not to feel so lonely either.
“If you can generate other sources of income, that can help you avoid having to cut so much,” Malani said. “Ideally, if you have a side business that you can spend more time on, you might be able to generate some extra cash. Selling things you don’t need on eBay or through a garage sale is a good idea. , not just in times of financial difficulty.
Selling your stuff a few times a year — not just when needed — could help you build an emergency fund, she added.
“Don’t just host a garage sale on your own,” Thakor advised. “Combine with a few other families and create a sort of ‘farmer’s market’ type sale so you don’t feel sadness when things are sold, but solidarity and connection with others facing the same difficult situation.”
Shutdowns seem to be more common these days. There was a 16-day shutdown during President Barack Obama’s presidency in 2013. The current shutdown is the third shutdown under President Trump and – as we mentioned earlier – is the longest shutdown in history. the United States. As such, government employees might need to start thinking about how to prepare for such situations in the future.
“There’s a lesson here, it’s important to plan for the unexpected. Having some precautionary savings, however small, can go a long way in mitigating the hardship and stress associated with a drop in income,” noted Annamaria Lusardi, founder and director of the Global Financial Literacy Excellence Center at the George Washington University School of Business.
This is a lesson not only for the workers, but also for the government.
“This is something the government can also help to do: rather than just providing suggestions on what to do in the face of a shock, it could promote what to do to avoid being unprepared. to a shock,” she continued. “For example, they could promote the creation of an employee emergency fund or remind employees of the existence of this fund, for example around tax refund periods, the end of the year and the end of the year. when they get a promotion. Saving is hard, but doing it in small steps over time builds up that little amount that can go a long way when things go wrong.