As the government shutdown extends into its third week, approximately 750,000 furloughed federal workers are urgently seeking ways to manage their financial obligations. This situation poses significant challenges as many workers find themselves in a precarious position, struggling to make ends meet without their regular income.
During a government shutdown, employees categorized as “nonessential” are mandated to remain at home without compensation. Although federal law guarantees them back pay upon the government’s reopening, the delay in income creates immediate financial stress as bills continue to accumulate. Many workers are left in a state of financial uncertainty while their paychecks remain in a political stalemate.
Shutdowns are “never fun or fair to the feds who serve,” emphasizes Wes Battle, a certified financial planner (CFP) at Financial Advantage Associates, who has extensive experience assisting federal employees during such crises.
As lawmakers, whose paychecks remain unaffected by the shutdown, find themselves at an impasse, uncertainty looms regarding the duration of the shutdown. Recognizing the challenges faced by furloughed employees, Money sought insights from financial planners to provide essential advice tailored for federal workers grappling with this unprecedented situation.
Here’s their expert guidance.
1. Strategically Prioritize Your Bills for Survival
Financial planners universally recommend establishing an emergency fund capable of covering several months of expenses, preparing for unforeseen circumstances such as a government shutdown. However, for many federal workers who lack substantial savings, this situation is particularly daunting.
“When paychecks cease, the primary directive is triage,” asserts Patrick Huey, a CFP and owner of Victory Independent Planning. “Focus on the essentials.”
Huey advises federal workers to prioritize payments related to housing and healthcare: “It’s crucial to maintain your home, utilities, insurance, and basic health needs as your top priorities,” he elaborates in an email to Money, “while cutting out all nonessential expenses.”
In dire circumstances, he suggests considering deferring payments on bills that are “not tied to survival,” such as credit cards, student loans, and streaming services.
“Damage to your credit or cash flow can be repaired, but the repercussions of losing your home or health insurance are significantly more challenging to recover from,” Huey emphasizes.
2. Minimize Credit Card Debt During the Shutdown
As the prospect of receiving backpay looms, it may be enticing for federal workers to rely on credit cards for their ongoing expenses throughout the shutdown. However, financial advisors caution against this approach.
If feasible, Huey advises using credit cards solely for essential purchases.
“Avoid accumulating debt for nonessential items during this challenging time,” he warns. “Be mindful of your spending to prevent being overwhelmed by future repayments.”
Battle points out that credit cards can be problematic. An alternative option for federal workers is to utilize their Thrift Savings Plans (TSPs).
Bear in mind that hardship withdrawals from TSPs may incur tax penalties and permanently impact the retirement account balance. However, obtaining a TSP loan can be a prudent choice during a furlough, as it offers low interest rates and no pre-payment penalties. Furthermore, the borrowed amount, along with interest, is returned to the account once repaid, Battle explains.
“No one can predict the duration of the shutdown or whether furloughed workers will have jobs in the future,” adds Bill Shafransky, a senior wealth advisor at Moneco Advisors. “You definitely want to avoid accumulating credit card debt that compounds with interest and presents a significant repayment challenge.”
Shafransky’s perspective highlights the heightened uncertainty surrounding this shutdown, especially as the Trump administration has considered terminating, rather than merely furloughing, some federal employees. (A judge has intervened, temporarily halting any reductions in force.) President Donald Trump has suggested that some federal employees may not be entitled to their backpay, despite the laws ensuring their compensation during the government closure.
3. Maintain Open Communication with Creditors
Huey strongly encourages federal workers to proactively reach out to their major creditors to inform them of their furlough status—especially landlords and mortgage lenders.
“Address the issue proactively by contacting every biller and lender before you miss a payment,” he advises, noting that this communication can pave the way for short-term relief options, such as flexible payment arrangements.
Some lenders may even offer benefits specifically for federal employees, shielding missed payments during a government shutdown from negatively impacting your credit score, he notes.
For instance, customers of PNC can request a freeze on credit reporting, while Lubbock National Bank has announced it will waive fees and refrain from reporting missed payments on its mortgages. According to the American Bankers Association, approximately two dozen banks are providing similar support to furloughed federal employees.
Experts also advocate for seeking assistance from community organizations. A valuable resource to quickly identify available local support is the My Fed Benefits tool, which consolidates known financial assistance programs for federal workers based on their location. It highlights discounts at local restaurants and entertainment options specifically for furloughed federal employees.
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