How to Deal with Furloughs During Sequestration

by Miranda Marquit

Many government employees are facing the challenges associated with the budget sequester. One of those challenges are furloughs.

Furlough Vacation

Should you vacation on a furlough, or do something else?

A furlough is an effort to save money by cutting back on employment. Employees might be forced to take time off without pay in cycles, for weeks at a time, or they might have their days cut back by between one and three days a week – with a corresponding reduction in pay.

For those affected by a furlough, it can mean the need for adjustments in your finances. The reduction in pay means that your budget is likely to be tighter. On top of that, you might have to cut back on your retirement account contributions, putting your future at risk.

How to Handle the Reduction in Pay

The most difficult issue to deal with when it comes to a furlough is the reduction in pay. You will need to figure out how to avoid a complete breakdown of your finances as a result of the furlough. Here are some steps to take:

  1. Prioritize your spending: Figure out what items need to be paid for. Bills, groceries, and other necessities need to be covered. Determine which items are the most important in your budget, and recognize which items are unnecessary. Know how to say no to items you really don’t need.
  2. Make cuts: Once you have distinguished between the needs and the wants, start cutting the wants. Where possible, cut items from your budget. It’s important to start cutting even before your first furlough so that you can start saving up a little bit to prepare for the time when you won’t be working.
  3. Find ways to earn more: In many cases, you will have time to earn a little extra money. Consider freelancing or consulting on days that you aren’t working at your job. Look for a flexible part-time job. You can also sign up with a local temp agency, and work on your available days. While this income might not be enough to completely make up for the furlough, it’s better than nothing.

Try to arrange your finances so that you can keep making the same contributions to your retirement account. If this isn’t possible, try to avoid stopping contributions altogether. Keep making some contributions – as much as you can – for as long as possible.

If you have debt, contact your creditors and find out about your options. Deferment and forbearance might be options, or you might be able to adjust your payment plan, or get a reduction in interest rate that makes your payments more manageable.

What to Do With the Extra Time

Another concern is what to do with the extra time on your hands. If you can arrange your finances so that you don’t need to try to fill every forced day off with work, this could be a good time to improve your own situation. Some things you might be able to do during your furloughed time include:

  • Going back to school: If you have been meaning to get a certain degree, or if you want to complete a certification, now might be the time for it. If you can get financial aid, it can even help you pay for the education. If you can develop a marketable skill during your furlough, you might be able to come back on when the furlough is over with higher pay (and partially make up for your reduced retirement account contributions), or even find a better job.
  • Working on your hobby: For those with really “together” finances, the furlough can provide opportunities to work on your hobby and just enjoy yourself. You can treat furlough as a mini-retirement or a vacation.
  • Starting a business: If you’ve always wanted to start a business, the furlough might provide you with the time you need. Get your idea off the ground, and you can create another source of income that can benefit you down the road.

You can use your time to do a few things that you want, and even create a situation in which you actually become better off than you were before the furlough.

Do you have a furlough coming up? What are you going to do during that time? Leave a comment!

Photo Credit: anda (:

Published or updated May 12, 2013.
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{ 3 comments… read them below or add one }

1 Kurt @ Money Counselor

A suggestion for how to spend furlough time: Get better educated about US politics and resolve to volunteer time to work toward a system where solutions to challenges are CONstructive, not DEstructive.


2 Jake Erickson

This is all great advice. Thankfully, I’m not facing any furlough soon (crossing my fingers), but I know a few people who are. I think the biggest thing is to not get lazy during your time off. It’s easy to get complacent and disheartened.


3 krantcents

I experienced furlough days for the last 4 years. I experienced as much as a 5% cut n pay. I altered my spending to avoid any material change sin savings etc. I set priorities and got through each year. In retrospect, I never thought it would last 4 years. I took it one year at a time.


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