How One Woman Survived The Government Shutdown Without Payday Loans

February 05, 2019

As the wife of a federal worker who actually got paid during the last shutdown, we developed a new appreciation for actually seeing a paycheck every two weeks. Unfortunately, this was not the case for a lot of my husbands’ friends and our neighbors. Since we live in the same area as a lot of federal government workers, it’s hard not to run into people who were impacted by the most recent government shutdown.

I asked one of my friends Kate, who was furloughed, how she handled the shutdown. She had said her ability to handle the financial impact came down to the financial planning she did before and during the shutdown, as well as her plans after she gets paid. Here’s how she did it.

Before the shutdown: planning

She had 3 months of expenses saved for emergencies

Kate has worked for the federal government for over 15 years. She said like many federal government employees, she initially saw her paychecks as guaranteed income, so she spent like her paychecks would never stop. The 16 day government shutdown in 2013 was her wake-up call. She realized that there are no guarantees to receiving pay and immediately started saving for emergencies.

She opened a savings account at a different bank (she wanted to remove the temptation to dip into it) and set up automatic payroll deposits into that account. She said having emergency savings made the shutdown an inconvenience instead of a financial hardship.

She created a crisis budget

After the first shutdown, Kate created a second budget she called a “crisis budget.” This budget eliminated any non-essential spending and drilled down to exactly how much she would need for the essentials like food, shelter and transportation. Kate said that knowing how much she needed to survive prevented her from panicking, because she knew exactly what to cut back and how long her savings would last.

She lived below her means

Throughout the years she tracked her spending monthly to ensure that she was living below her means. She used the budgeting software through her bank, but also researched other budgeting software programs like Mint.com. She said tracking her spending helped her to understand exactly where her money was going so she could stay on track with her financial goals.

During the shutdown: implementing

She contacted creditors immediately

Even though she had an emergency fund, Kate realized she had no idea how long the shutdown would last. As a safety measure, she contacted her creditors and informed them of her status. Luckily (depending on your perspective), all of her creditors were well aware of the government shutdown and offered to work with her if she got to a point where she could no longer pay her bills. She realized the more she communicated with her creditors, the more willing they were to work with her.

She immediately adjusted her lifestyle

She implemented the crisis budget and immediately adjusted her lifestyle to her new circumstance as soon as she was furloughed. Basically any expense that did not involve the essentials such as food, shelter and transportation came to a halt.

After the shutdown: recovering

She’s resisting the urge to splurge

Interestingly, Kate pointed out that how you handle finances immediately after a crisis is important. She shared that the temptation for her is to immediately go back to her prior spending, but doing that will prevent her from rebuilding her emergency savings. She plans to stick to her crisis budget until her emergency savings is rebuilt. She said she also encouraged her fellow co-workers to keep their spending to a minimum until any debt accrued is paid off and their emergency savings is rebuilt.

Surviving the ‘stress test’

Overall she said she used the last shutdown to “stress test” her financial stability and worked on improving her finances. That decision 5 years ago helped to make this shutdown a minor blip on her finances rather than a life-altering crisis. Her overall guidance to anyone is that no one’s financial situation is guaranteed, so we all must plan for unforeseen circumstances by: