How you (and your finances) can survive the federal shutdown
There’s no end in sight to the partial federal shutdown and, more distressing to federal workers, no paycheck in sight either.
The shutdown has furloughed 380,000 federal workers and forced an additional 420,000 to work without pay. President Donald Trump has said he is willing to keep the government closed for months or even years to get his demands met. But even if an agreement is reached and the government reopens, it could be some time before anyone earns a fresh paycheck or gets potential back pay.
It’s a burden that few American households can bear without strain. Some experts weigh in with tips on how to cope:
PRIORITIZE YOUR BILLS
Sit down and take a good look at what bills are due, or will be due soon.
Rank your obligations by importance in case you cannot meet them all. Mortgage and utility bills should top the list, followed by credit card payments and any other revolving debt. Consider making just the minimum payments on your credit cards for now. Then look at any other spending to figure out what is essential and what can be trimmed. Limit spending to must-have items only until pay resumes.
Contact the lenders for your mortgage, credit cards, auto loans and any other expenses to discuss your options.
The upside is that companies are aware of the situation and a number of them are offering help.
Chase, for one, has been automatically refunding overdraft or monthly service fees for customers who had direct deposit of federal government paychecks to savings and checking accounts since the shutdown began. It also is offering various hardship options for its auto, credit card and mortgage customers. AT&T said that it will waive late fees, provide extensions and otherwise work with customers on flexible payments for phone, internet and television service as long as the shutdown is in effect.
Several large banks, such as Bank of America and Wells Fargo, are also making their hardship programs available to federal workers and others hurt by the shutdown. The terms vary but typically include options for delayed payment, waived fees or loan modifications on various products. Smaller banks are taking steps as well: Oceanfirst Bank in New Jersey said it will grant forbearance or temporarily suspend mortgage payments for up to 90 days for borrowers whose income is affected by the shutdown.
But you must contact the companies to get any sort of assistance.
It’s time to find some money to tide you over.
Households without emergency savings should consider other sources of cash, such as selling assets, be it stock or unused items around the house. Other options include withdrawals from a Roth IRA, which are tax and penalty free; borrowing from cash value life insurance policies; or tapping a home equity line of credit.
Consider borrowing from family, if it isn’t too fraught with complications.
There are decent opportunities to borrow elsewhere as well. Some banks, such as Navy Federal Credit Union are offering certain customers affected by the shutdown a loan of up to $6,000 at 0 percent APR. Others, such as USAA, are offering low-interest loans to certain impacted workers. The American Federation of Teachers, a union that represents a number of federal government employees, is also offering interest-free loans for its impacted members.
Try and avoid riskier sources for money, such as raiding your retirement stash or college savings for the kids; the long-term negatives might not be worth the short-term relief. Avoid title loans or payday lending as the interest rates are exorbitant. While some use of credit cards is understandable, be aware that those balances may become due before your pay resumes.
You may be able to seek unemployment depending on your job and where you live. Unemployment rules are determined by state law, so whether you qualify is based the state you live in, said Tom Spiggle, founder of Spiggle Law Firm in D.C.
A word of warning: You’d be obligated to repay the state for any benefits you received if you are granted unemployment but later receive back pay.
GET A SIDE HUSTLE
Federal workers can find another paying job as long as there is no ethics rule or statute that prohibits it, Spiggle said. Some positions may prohibit you from doing related work but may allow you to do unrelated work.
The U.S. Coast Guard suggested employees hold garage sales or offer to babysit, walk pets or housesit to earn cash — tips that were perceived by many as tone-deaf and were later removed from a support program website. But sadly, it may come to that for many families. The flexibility and cash found through the gig economy may prove essential for some workers.
Barbara O’Neil, a financial planner and professor at Rutgers University, suggests workers should inventory their skill set and think about ways to convert those into an income stream.
However, time may be an issue for those working without pay. Spiggle said there has been some speculation that the TSA agents who called in sick were doing so to work other jobs to make ends meet. He warns that is an improper use of sick leave and could get a worker disciplined or even fired.
If you find you cannot get by, look into what public assistance is available. Call 211 or visit www.211.org to find out what human services programs are available in your community. Examples include SNAP — the supplemental nutrition assistance program — energy assistance and food pantries. Several food pantries nationwide have made themselves available for those individuals or families at risk of going hungry due to the shutdown.
TALK IT OUT
There is a sense of powerlessness to this situation that is frustrating for workers, said Dennis Nolte, vice president and financial planner at Sea Coast Investment Services in Florida. Workers have “have no earthly idea when they’ll be able to go back to work” and are stuck in an odd limbo between employed and unemployed. He recommends talking to friends or relatives or forming a group with co-workers to commiserate about uncertainty to help keep the stress in check.