There are times of abundance, and times of scarcity.
Furloughs are times of scarcity if you or someone in your family is being furloughed. A furlough is not as bad as job loss, but it’s like a partial layoff: fewer hours.
Several hundred thousand Department of Defense employees stand to be furloughed for one day per week for the last 11 weeks of the fiscal year. The discussion on the topic is much quieter than it was two weeks ago, so that likely doesn’t bode well for any potential sequester-saving deals. So, it’s becoming a better and better prediction that there will be a shortage in some paychecks this year. (I don’t see the rest of America getting up in arms over the pay of a bunch of civil servants. I certainly wouldn’t care too much if another group got hit by a furlough and I wasn’t affected by it. I’d be glad it wasn’t me.)
So, unless there’s enough of an emergency fund to avoid scrimping through the furlough, then it will be necessary to make up the shortage somehow.
Ways to make up the shortfall fall into two broad categories. The two broad categories shouldn’t be surprising:
- Spend less. If the furlough takes away 20% of your take-home pay, then spending 20% less overall will make up the shortfall. Stating it that way doesn’t seem so bad, but 20% of a few thousand dollars a month (typical) is in the high hundreds, or even low thousands, per month. And, just like the sequestration hit really hard because the 10% reduction in the budget hit the smallest pot of money (discretionary spending), taking 20% off the top of a family’s budget will hit the discretionary spending of the family’s budget a lot harder than 20%. Why? Because there are fixed or nearly-fixed costs in a family budget: mortgage, car payments, child care, utilities. It may not be possible to reduce or postpone these items, so the 20% must come out of the remaining discretionary items, in a proportionately higher amount.
- Make more. If the furlough takes away 20% of your take-home pay, then making that 20% somewhere else will make up the shortfall. Coming up with ways to do this is limited only by your imagination. Implementation is the rest. The first step with implementing a secondary income stream is making sure that your organization allows it. Furloughs are funny that way: You can’t work for one day per week, but you’re still an employee, and there may be limitations as to who you can work for during the days you’re not working your regular job. Assuming that step is taken care of, then it’s a matter of making good use of your furlough days and of other discretionary time to bring in the money.
If you’re facing a furlough soon, and haven’t already gotten acclimated to the idea of working with less primary income for a while by a practice furlough budget, please do this now. The longer the period of time you’re spending less, the less it has to hurt, because the shortfall due to the furlough is a fixed amount, which you can figure out. Likewise, if you start looking for extra income now, rather than later, you have the potential to earn more to put toward the shortfall.
If you’re being furloughed, how are you making up the shortfall?