While Democrats and Republicans hash out the details of a compromise, roughly 800,000 government employees have been furloughed and now face financial uncertainty.
If you’ve been furloughed and you haven’t built an emergency savings account for this unforeseen circumstance, here’s what you should consider:
1) Curb your Spending.
Eliminate any unnecessary expenditures and luxury purchases immediately. Although this may be a temporary situation, you don’t want to accumulate more debt during this time of uncertainty.
2) Review and update your resume.
While you may be counting on the government re-opening soon enough, take this opportunity to update your work experience and skills on your resume and post to LinkedIn. You may even find a way to engage in freelance work to fill in the gap in your regular government income.
3) Reach out to your connections.
Contact friends, family, coworkers, and business owners who may need short-term help and willing to hire you on a temporary basis. It’s always smart to explore your career options, and it never hurts to take on an extra “side-hustle.”
4) Stay active and focused.
While it’s easy to become consumed by the news, try to reset your mind and focus on being productive in different ways. If you have house projects or errands that have been neglected, now is the time to get them done. Don’t stay glued to the TV and internet – get outside and go for a walk or exercise in other ways to keep your body and mind healthy so you’ll be ready to hit the ground running when work resumes.
5) Make a Plan for Future Savings
This event can be a wake-up call for many affected. Make a plan now for how to increase your personal savings rate once your income resumes so you can build a more substantial emergency fund. History may certainly repeat itself and being better prepared the next time you face furlough, lay-off, or unexpected health issues will alleviate your current and future worries.
6) Ask your Advisor about Selling Investments.
If you have a taxable brokerage account, you may be able to liquidate some of your investments in exchange for emergency cash. Always make sure to consider the tax consequences of these sales.
7) Contact your Credit Card companies/ Mortgage Company/ Landlord.
You may be able to request a delay to your monthly payment. It’s not guaranteed, but if you have excellent credit history, they may be willing to negotiate with you. You never know unless you ask.
8) Review the options for withdrawing money from your retirement accounts.
This should always be your last resort, but if you are living paycheck to paycheck and do not have adequate savings to cover a missed paycheck, look to your retirement accounts to see if you may qualify for a Hardship Withdrawal or 401(k) loan. Of course, if you are over 59 ½, you’re able to take a distribution without penalty, although the withdrawal will incur income taxes.
As always, your trusted advisors at PSG are here to discuss your immediate and future financial needs. Please do not hesitate to reach out to us with questions and concerns. Having a plan and knowing your options can be a relief during this troubling financial time.