3 financial tips for Federal employees adrelifted by the shutdown
As the government shutdown rages into its third week, an estimated 750,000 farm workers have stopped making ends meet.
When the government shut down, workers classified as “non-essential” were ordered to stay home without pay. When the government opens, federal law says they are entitled to backpay, but the bills are now involved while their paychecks are in the political wound.
Shutdowns are “not fun or good for those who serve,” said Wes War, a Certified Financial Planner (CFP) at Financial Advantage Associates who works with federal employees.
Lawmakers – whose payments are not affected by the shutdown – remain unclear, and it is unclear how long the shutdown will last. So the money asked financial planners for their pieces of advice for domesticated workers navigating the third government shutdown in recent years.
Here’s what they recommend.
1. Pay off your debts
Accordingly, financial planners suggest building an emergency fund that can cover several months of expenses for situations like this. But for government employees who have no savings to depend on, the shutdown is more difficult.
“When the paychecks stop, the first rule is The Triache,” says Patrick Huey, CFP and owner of the independent planner Victory. “Prioritize the important things.”
Huey encourages Federal employees to focus on housing and health-related bills: “Keep your roof, utilities, insurance and basic health needs at the top of the list, but cut money,”
When it comes down to it, he says, you might want to look at ridiculous payments on “non-survival” debts, such as credit cards, student loans and streaming services.
“Any hit to your credit or finances can be repaired, but recovering from a lost shelter or insurance is very difficult,” added Huey.
2. Avoid credit card debt (if possible)
With BackPay at Horizon, federal employees can now place their regular expenses on a credit card during the shutdown. But financial advisers say to be wary of that strategy.
If you have a choice, Huey says the only thing that matters is using credit.
“Avoid betting on stocks you don’t need right now,” he adds. “Try to limit expenses so you don’t get overwhelmed by the fees.”
War says credit cards are bad. Another way Federal Alteratral employees can tap into their savings plans, or TSPS.
Remember, hardship withdrawals from TSPS can come with tax penalties and permanently reduce your retirement account balance. However, a TSP loan can be a smart option during furlough, because it comes with low loan rates and no prepayment penalty. And, the amount borrowed — along with the interest charged — goes back into the account once it’s repaid, the military said.
“No one knows how long the shutdown will last or if the mature will have a job when this is over,” added Bill Shafransky, senior wealth advisor at Moneco Advisors. “What you don’t want is a balance on a credit card that includes interest and no way back.”
Shafransky’s advice underscores the added uncertainty of the shutdown, as the Trump administration tries to fire — not just buy out — other workers. (The judge issued a temporary ruling on any reduction in power.
3. Communicate early and often
Huey recommends Federal employees contact their major creditors to let them know about the furlough – especially creditors or lenders.
“Get ahead of the curve by calling every lender and lender, even before you miss a payment,” he said, noting that this could open up short-term help options such as installment payments.
Some lenders may have federal employee benefits that keep payments lost during the government shutdown from the bottom of your heart, she said.
PNC customers can request a freeze on credit reporting, for example, and Lubbock National Bank says it will report fees and not report missed payments in its enforcement. According to the American Bankers Association, about two dozen banks offer similar services to livestock workers.
Experts also recommend tapping community organizations for help. One option to quickly scan what’s available nearby is my benefits tool, which includes well-known federal employee financial assistance programs based on location. Features discounts on local restaurants and entertainment options for Furloughed Federal employees.
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