Facing furloughs: 10 strategies for surviving tough financial times

Tips for negotiating with lenders, providers

Chris Buck of Life Plan Financial Group in Dayton offers the following tips for working with lenders and service providers to help reduce costs and keep credit scores healthy.

Local and federal resources

The following programs offer support for families dealing with tough financial times:

Faith-based assistance agencies:

Job resources

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The Dayton Daily News is committed to providing up-to-date news and information about the sequester and its impact on both Wright-Patterson Air Force Base and our community. Turn to Life for advice and information aimed to help impacted employees and their families navigate these difficult times.

“How do we get through this?”

That’s the question 13,000 civilian employees at Wright-Patterson Air Force Base are asking as they prepare for a major hit to their finances over the next six months. Most Wright-Patt civilian employees face 22-day furloughs, taken one day a week between late April and September. Unless the divided U.S. Congress takes action on the sequestration cuts to the military budget, these furloughs would amount to a 20 percent pay cut this year for the impacted employees.

“Right now, people are realizing this is going to happen — they’re going to lose money,” said Col. Cassie B. Barlow, commander of the 88th Air Base Wing, which is responsible for base operations. “They’re looking at how to manage it from a stress standpoint and a financial standpoint. Fortunately, there’s a lot of agencies coming forward, on base and off base, that want to help.”

We spoke with financial experts from the region and leaders at the base to identify strategies that help families get through tough times.

1. Cut the easy stuff

“When it comes to a cut like this, the first thing you need to do is re-look at your family budget,” said Carrie Bray, certified financial planner and senior wealth manager for Buckingham Financial Group.

A simple pencil-and-paper outline of how much your family spends on regular bills and other costs, such as groceries, clothing and entertainment, gives you the power to make changes.

“It would be ideal if you can maintain the same core lifestyle and stay on track,” Bray said. “But that won’t always work, especially for younger people. A 20 percent hit is big, and there aren’t a lot of low-impact things that would add up to that instantly.”

Some ideas for trimming back:

“Just going through this exercise can help a lot of people,” said Chris Buck, certified financial planner and vice president of Life Plan Financial Group in Dayton. “You can find out that you actually can be saving more for retirement or emergencies. It might be a little painful at first, but recognize that you want to come out the other side without being in debt.”

2. Reduce bills and investments

The next step is to look at reducing fixed expenses, like utility bills. Families can do this on their own or work with a consumer credit counselor, Buck said.

“One of the big things families can cut out is cable,” he said. “Check with your provider and renegotiate for what’s important.”

Bray said most companies are willing to negotiate, especially if families let them know they’re shopping around or considering cancelling.

Some ideas for reducing bills:

3. Downsize

Buck said reviewing a budget and trimming expenses can make it easier to recognize that mortgage, car loan or maintenance costs are unaffordable.

“By putting things on paper and looking at the numbers, they can see getting into something smaller and not having the ongoing upkeep will definitely help,” he said.

Once a financial crisis has passed, Buck said, the money that would have gone to expenses can go to savings and other areas.

On the other hand, families who downsize contributions to long-term investments such as college funds or retirement should keep the reduction temporary.

“It might be funny to hear a financial adviser say, ‘sure, knock your retirement off track,’” Bray said. “But if you’re in your 20s or 30s, you have time to make that up or put a little more in down the road.”

4. Sell and barter

One additional way to downsize is to get rid of excess stuff. Clearing out extra furniture, exercise equipment, electronics, movies or books, cookware, vehicles, lawn equipment and more can bring in some cash while helping families focus on what matters.

Good ways to move these items include local newspaper classifieds, Craigslist.org, yard sales and circles of friends.

Families can also explore bartering for goods and services such as yard work, babysitting, personal shopping and organizational help.

5. Bring in more income

For families whose expenses are at a minimum but still need help, WPAFB and regional job centers can help identify more sources of income. This could mean working with employers to bring in a raise, finding part-time work, offering consulting services or moving to a new job or career altogether.

For help, consider visiting local job fairs, including the annual WPAFB Spring Job Fair, scheduled from 10 a.m. to 3 p.m. Wednesday, April 10 at Wright State University’s Nutter Center.

6. Tap your network

Until additional income arrives, financial advisers encouraged families struggling to keep the lights on at home to reach out to families and friends, as well as their communities.

“If it gets to the point where you’ve cut expenses but you still can’t make it, ask for help,” Bray said. “Church families are always ready to help someone in need with meals, transportation, child care.”

7. Don’t hurt your credit

Advisers warned families against taking drastic measures — including using credit cards or opening multiple credit lines to meet basic needs.

“Hide your credit cards,” Bray said. “Put yourself on a cash allowance. If it’s Thursday and you have $2 in your wallet, you don’t go out to eat.”

If you absolutely must use a credit card, Buck said, call the lender to renegotiate rates, always make at least the minimum payment on time and have a plan for paying them back.

8. Work with the bank

Refinancing a loan can work, but Bray cautioned against taking drastic action during a temporary setback like a furlough.

“You wouldn’t want to run out and refinance your house unless you’re paying something ridiculous like 7 percent,” she said. Although mortgages and auto loans are at all-time-low interest rates, Bray said that can make negotiating with banks and lenders difficult.

“People shopping around for lower interest rates find that it’s not very competitive because rates are so low,” Bray said.

9. Draw on savings — smartly

Finally, advisers said families should absolutely avoid tapping their long-term savings and retirement funds, and if they do, to have a strategy for rebuilding.

“Assets are a last resort,” Buck said. “Borrowing from home equity or retirement plans involves penalties and taxes, so we don’t recommend them. But sometimes there are no other choices.”

10. Take care of your health

Financial challenges like furloughs can take a significant toll on families’ emotional resources and physical health. Taking time for relaxation, exercise and staying connected with your loved ones can help keep future medical costs down and the family strong, regardless of income.

For help in these areas, work with counselors or your local recreation center. Find out if your health insurance includes wellness benefits. WPAFB civilian employees can connect with AFMC Wellness Support for family counseling, stress management and healthy lifestyle programs.

“It’s about focusing on strengths instead of weaknesses,” said Jane Gunnison, a social worker with the Base’s Family Advocacy Program. “It’s helping people recognize the positive support they already have and build on that.”