Four Tips to Help You Deal With a Furlough or Loss of Income

Four Tips to Help You Deal With a Furlough or Loss of Income

By Claudia Warszawski
Personal Finance Manager, Navy Federal Credit Union

Do you have a strategy for dealing with a sudden loss of income?  Here are four tips to help you through tough economic times.

1. Set a Budget and Cut Unnecessary Expenses

Most people already know this, but it's worth mentioning time and again, as it's true for any economic climate and income level. Everyone should have a sound budget plan. If followed correctly, having a budget assures that you're living within your means while saving for unexpected emergencies and retirement.

Your first step when dealing with a loss of income is to assess your current financial situation. Review your new monthly income and subtract all anticipated, recurring living expenses including credit payments. If the resulting number is too low for your comfort--or negative--you need to make some budgetary adjustments.

Do this by closely examining your weekly expenditures for areas where you can cut expenses like dining out or entertainment. Eliminating daily coffee trips, cable subscriptions and buying your lunches can put significantly more money back into your wallet.

For necessities such as groceries, costs can be cut by eliminating junk food, buying generic items, and shopping at discount stores. Look for other areas that can be trimmed, too, like refinancing major loans and lowering monthly payments.

2. Adjust Your Means of Transportation

If it's possible, find a way to reduce your travel expenses. With gas prices currently hovering at or around $4 per gallon (depending on your location), your commute to work can be costly. Taking public transportation, or finding a carpooling partner can help absorb a loss in income. For instance, paying $40 a week in gas totals $160 each month. Cutting the weekly cost in half to $20 by taking public transportation or carpooling equates to $80 per month. Over six months, that's a saving of $480. Over a year, you'll save $960. Additionally, less driving also means less 'wear and tear' on your vehicle and fewer trips for costly maintenance and repairs.

If a carpool is out of the question, maybe it's time to question the car. If you can’t trade in or downsize your car for a more fuel-efficient used vehicle, seek out ways to get better mileage for your current car.  The US Department of Energy features a variety of gas mileage tips here.

3. Make it a Family Goal

Teaching the value of a dollar is always more meaningful when you get the whole family involved. If you have a spouse and/or children, it's extremely important that the entire family understands and assists in the new savings goal.

Share with them your new financial challenges, stressing that everyone can play an important role. Bringing bag lunches to school, game nights at home, and free outdoor activities can all help the family save.

If there are teenagers in the house, their involvement is even easier. With summer approaching, help them find a part-time job where a portion of their income can be contributed to family expenses. Additionally, everyone can participate in organizing a yard sale. Plan one, and you'll end up reducing clutter and getting paid in the end.

Having a family discussion about finances isn't easy. But, it will be a valuable lesson -- especially for younger children -- in teaching good money habits.

4. Talk to Creditors

If in the end you find yourself still unable to pay some or all of your bills, contact your creditors immediately. Explain to them your financial situation and request information about their hardship programs where you may be eligible for temporary deferment or payment reductions. Any help would be a benefit to you.

Navy Federal understands the difficulty that a federal government furlough could pose to families. To better serve our own members during this period of uncertainty, we've been asking them to call us on our special Sequestration Hotline at 1-877-874-0042.

Tip of the Day

  • Written by Guest Blogger | September 30, 2014

    Develop a long-term plan and foundation for financial readiness by establishing a spending plan. More tips at: http://ow.ly/sCvQQ

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