Managing Through a Government Shutdown…and What Comes Next

Here we go again.

As of this writing, the federal government has been shut for 20 days with no end in sight. It’s a frustration for every American, but for federal workers (including contractors) it is so much more than that. During the 35-day shutdown in 2018-2019 (which I experienced firsthand as a federal employee), hundreds of thousands of federal workers were left bereft with many falling into debt.

Adding to the stress this time is the uncertainty that many federal employees will face on the other side of the shutdown. Will they return to work only to find that a layoff awaits?

Below, I’ll explore specific practical tips for managing your finances through a shutdown, but to start I have two over-arching words of counsel to offer:

In the heat of the moment, don’t rush to implement decisions that will have long-lasting negative consequences. This includes taking on the most pernicious forms of debt to raise cash because it may be quick and convenient, without first exploring other options to improve your cash flow.

If you have a healthy emergency fund, that’s great. You are in a strong position to weather the storm. But the guidance below still applies to you. No one knows how long this shutdown will last, so limiting withdrawals from your emergency fund is essential. Don’t wait until your emergency fund is exhausted to act.

Do This First

File for Unemployment Compensation

Depending on your state, this may be a relatively straightforward endeavor or a bureaucratic labyrinth. Regardless, this is your first act of self-defense. While the benefit amount may be small in comparison to your salary (perhaps a few hundred dollars per week), every dollar received in unemployment compensation is a dollar that you can put towards your most urgent needs and avoid adding to your debt load. (But don’t forget that if you are eventually repaid your lost wages, you must pay back what you have received).

Contact Your Creditors Immediately (even if you are not in immediate distress)

During the prior shutdown, credit card companies and banks were willing to work with borrowers to reschedule payments. But don’t stop there. Contact your mortgage servicer if you own your home, or your landlord/property manager if you are a renter. Seek temporary relief from utility companies. If you have a federal student loan, contact your loan servicer (they’re still working!) and request a payment deferral.

Do you have a Thrift Savings Plan loan outstanding? The TSP website states, “If you have a TSP loan and are an active participant (not separated from federal service or in a non-pay status for another reason), we will automatically update your status to keep your loan in good standing, even if we do not receive repayments during the shutdown.” That’s good news indeed!

Triage Your Priorities

Food, shelter, warmth, health — these are your priorities. Your most important task today is to have a clear action plan for how you will keep a roof over your head, food on the table, the lights turned on, and prescriptions filled. Everything else needs to take a back seat.

Do you have a car payment due despite your attempts to get relief from your lender? If so, this may also rise as a priority as many auto lenders are surprisingly quick to repossess after a missed payment. In the spirit of not making an immediate bad situation worse in the long run, you do not want to find yourself without the means to get to work once your agency re-opens.

Look To the Gig Economy

Can the gig economy offer relief? The most obvious options include ride-sharing apps (if you have a car and are comfortable with taking this on) and dog-walking/pet care. What about child or elder care? Tutoring? Are you a whiz with a hammer? Can you rent out a room in your home?

Ask For Help

You may never have been in this situation before, and this may be an especially hard pill to swallow. Reflect on your most urgent priorities. Would a visit to a food bank allow you to save the cash you need to make a rent payment? For lower-paid federal employees, the Federal Employee Education and Assistance Fund (FEEA) has a limited ability to offer micro-grants to furloughed employees.

Consider a TSP Loan

Almost all federal employees have a TSP retirement plan. While no one truly enjoys the idea of taking a loan from retirement savings, this is certainly a preferable option than high interest credit card debt or making a withdrawal from your retirement savings. During this lapse in government appropriations, TSP is still at work processing loan applications.

What Comes Next?

Presumably, there will be an eventual end to the government shutdown. After you catch your breath, working with an AFC® can help.

In what state did the shutdown leave your finances? How did you feel during those weeks?

If your shutdown experience was characterized by trauma, you absolutely need a strategy for the future. But even if you came through relatively unscathed financially, the shutdown may have exposed cracks in your financial armor, perhaps ones of which you were unaware. Are you prepared for more employment uncertainty ahead?

An AFC can help you craft and implement a realistic plan of action to create long lasting financial stability.  For example, an AFC can help you strategize to resolve debt and move towards building sustainable wealth. Together with an AFC, you can identify opportunities to build savings, whether for emergencies (such as government shutdowns) or longer-term goals.

Lisa Whitley is an Accredited Financial Counselor® and Founder of MoneyByLisa LLC. Visit Lisa’s FindanAFC Profile to view her services. Also, connect with her LinkedIn and learn more on Facebook.