A government shutdown happens when congress cannot agree on the appropriation of money to create a budget for the upcoming fiscal year. When this happens, some or all non-essential government operations cease.
Some employees are furloughed, meaning they are granted a leave of absence from their job, whereas other employees are expected to show up for work without receiving payment for the hours they are working. Regardless of which category you fall under, being without pay makes it difficult to cover your monthly expenses and puts you at a financial disadvantage.
The longer the government is shutdown, the longer it takes for you to receive your next paycheck. After previous shutdowns have been resolved, government employees were granted backpay for the time spent furloughed or working without compensation. This is not guaranteed though and you may be struggling to make ends meet until you receive a steady flow of income again. Follow these guided tips to find ways of making ends meet for your family until your job status is fully restored.
When the government is shutdown and you are going several weeks without pay, it is necessary to create a budget to ensure you are paying the most important bills first. Some bills, such as your utility bills, must be prioritized as you are going to lose this service to your home if you fail to pay the balance on your account. Other bills, such as gym memberships or streaming services, can be severed until you are receiving a regular paycheck following the end of the government shutdown. In some instances, you may be able to contact your utility providers to speak to them about your current situation and see if they can offer you some leeway on making your payments. Ask if it is possible to defer payments until your income has returned without receiving a disruption in your electricity, gas or water in the meantime.
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Additional bills to prioritize include your food expenses, credit card bills and any outstanding collateral loans you are working to pay off. This is essential as you can lose points on your credit score if you fail to pay these bills on time. If you are struggling to pay for food each week, consider contacting a local foodbank or community program for added assistance. The food you receive from these programs can supplement the food you purchase each week and helps ensure your family is staying well-fed during the shutdown. Local churches help to supply food for people who are in need as well.
Furloughed government employees qualify for unemployment benefits as mandated by the Unemployment Compensation for Federal Employees Program. If you have not already done so, take the time to contact unemployment services and complete the application process to begin receiving benefits as soon as possible. The eligibility for this service varies by state, though most provide furloughed employees with approximately 26 weeks of regular benefits at the maximum amount. The amount you are provided varies on a case by case basis but receiving a small portion of benefits helps to supplement the savings you have and any room remaining on your credit cards.
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If you receive back payment once the government has been restored, you are required to repay the benefits you receive from the unemployment office. These payments are made to your state of residence though you can opt for repaying your benefits through the online portal overseen by unemployment services.
If you are unable to make payments on a collateral loan or to your credit card company until you are receiving steady income again, contact the loan providers and credit card companies directly to discuss this issue. Some loan providers offer a financial hardship program to customers who are struggling to make payments due to unemployment. Register for this program as this helps you to either modify your existing loan or defer your payments until the shutdown has ended. Each provider offers different options, and some may not help during this time of difficulty, meaning you must prioritize making this payment over paying off other outstanding debts.
The Office of Personnel Management provides letter templates for you to use when contacting a loan provider to request financial assistance during the government shutdown. These templates may additionally be used to address a letter to your landlord to inform him or her of your financial situation. It is important to provide documents reflecting your income status, employment status and the terms of changes to your pay when mailing these letters to landlords and lenders. This is to provide direct evidence of your financial hardship during the shutdown so that your landlord or loan provider understands you are incapable of making payments until your compensation has been restored.
When mailing these letters, include the account number and your personal contact information to ensure you are notified when the letter is received. It is advisable to contact your loan provider or landlord in advance to ensure he or she is aware of the letter and of your current situation as it may take time for the paper correspondence to arrive in the mail.
Speak with your credit card provider to request information on any payment grace periods or temporary reductions in minimum payments until the shutdown has been resolved. This helps you avoid a spike in interest rates which drives up the overall balance of your credit card accounts. Many credit card providers are supplying customers with an extended grace period or are seeking to reduce the minimum monthly payments until government employees can repay their debt more comfortably. Alternatively, you can choose to transfer the balance of your current credit card to a company providing a lower interest rate as this helps you save money over the course of the shutdown.
Credit card companies often offer new customers the chance to transfer an account balance while maintaining a zero percent APR for a period of 12 months or longer. This allows you to manage your balance and make your payments more effectively.
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