Have you or a family member been furloughed as a result of sequestration?
Personal Finance Manager Claudia Warszawski shares advice for those experiencing financial hardships and offers the following ways to overcome the challenges of a reduced paycheck:
1. Set a Budget and Cut Unnecessary Expenses
Your first step when dealing with a loss of income is to fully 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 by 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 your car is older and not fuel efficient, it may be costing you more than just gas money. By trading in or downsizing an older car for a new or pre-owned vehicle, you could put hundreds of dollars back in your household budget when you combine the savings of a lower payment and gas expenses.
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.
To better serve you during this period of uncertainty, call us at 1-877-874-0042, our special, Sequestration Hotline number with 24/7 live phone support. More information about our assistance can be found here:
Finally, our Personal Finance Specialists are always available to offer free budget assistance and encourage good savings habits. As always, we’re going above and beyond for our members to help them cope with any financial stress associated with federal government furloughs.