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Get Your Finances in Order – Shutdown Budgeting 101

This story about the shutdown is originally from October 14, 2013. It has been edited for timeliness. 

We are now on day 14 of the government shutdown and for furloughed feds the financial impact is really starting to sink in. There is still no clear answer on whether or not feds who are furloughed will receive backpay. So for now, furloughed feds have to brace for the financial shortfalls. How do you do that?

Ann Vanderslice is the president of Retirement Planning Strategies.

Vanderslice says people are scared and should be about paying their rent or mortgages on time. She told Chris Dorobek on the DorobekINSIDER program that more and more people are thinking about their retirement right now because they’ve been under pay freezes and budget cuts, sequestration, furloughs, everything is piling on top of them and just thinking that they can’t see some way out.

“Even if you have an emergency fund, you thought this was going to go a few days and now there is no sign of a resolution and you are wondering how much longer it might go on. A month even? For those people who are living paycheck to paycheck and don’t have an emergency fund set up, how do you pay your rent or your mortgage?” asked Vanderslice.

Should you take a loan from your TSP?

“Yes, if you really don’t have any funds, borrowing from your TSP is better than defaulting on your loans and ruining your credit score. I process between 8 and 10 transfers a week for TSP. We always fax them in. We’ve been trying to fax in transfer forms for a week and the fax line is constantly busy. We finally called TSP this morning and they said we are inundated with requests for people taking money out of their TSP. So that tells us a lot about how many people are doing this,” said Vanderslice.

Is there a tangible impact?

“We can look at big government and say we don’t want big government. But when you have to look a person in the eye, who is worried about whether they can feed their family or pay their car payment – you get a whole new sense of empathy then when you make it a faceless entity,” said Vanderslice.

If you are going to be late making a payment, should you call your creditors?

“You want to be proactive because those credit card companies are much more likely and willing to work with you if they know about it ahead of time. You want to have that conversation so it goes into the record of your credit history,” said Vanderslice.

Make sure you have an emergency fund?

“One of the first things you should do is make sure you have an emergency fund, before you put money in your TSP. A lot of people that work for the federal government don’t take that to heart. They think they work for the federal government, they don’t need that emergency fund. But now it has become glaringly apparent they might. So the first thing you might do when you are retirement planning is say, ‘when we go back to work I am going to make a concerted effort to make sure that I have six months work of expenses set aside so I don’t end up in this position again,'” said Vanderslice.

What will the impact of the shutdown have on your retirement?

“Some of the recent questions I’ve heard was, ‘How will this affect my retirement? I was planning on retiring next year, will this mean that I can’t retire?’ The answers to those questions is no. It does not affect your high three. It doesn’t impact your creditable service. Other than being a big nuisance today in terms of your cash flow it is not going to impact your retirement,” said Vanderslice.

You can find all of GovLoop’s shutdown coverage here.


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Kathleen Smith

Ann, thanks for the great tips. It should also be noted that anyone who has a security clearance should keep detailed records of what they are doing and why. Financial considerations are one aspect of security clearance adjudication. Being able to clearly show what you did, when, with whom and why due to the shutdown, will assist one greatly if any of the financial concerns come up during the next review process.