5 tips for paying your bills on time during furlough

Tuesday - 10/8/2013, 12:49pm EDT

With the Senate still waffling on passing a bill to ensure back pay for furloughed federal employees, the status of many feds' paychecks is unknown. But what is for certain is the bills are still due.

Registered Employee Benefits Consultant Ed Zurndorfer offered some advice for how to make payments on time on the Federal Drive with Tom Temin and Emily Kopp.

Contact your lender

Federal employees with student loans or car payments may find it difficult to keep up with payments with the lack of a few paychecks.

Zurndorfer recommends that employees contact their lender and explain the situation.

"When I was with the federal government, I had a car loan ... that was being paid back through payroll deduction," he said. "When the government shut down, I was out of work for about three weeks, so I missed one paycheck. I contacted the lender, and they said, 'You're not the first person to contact us. We're aware of it. We'll work with you. Just keep us informed as to when the next payment will be once you go back to work.' They were very open."

Save for a rainy day

For federal employees who are working without pay, many are incurring travel expenses that under normal circumstances would be reimbursed. But during the shutdown, reimbursements are put on hold.

To pay for these, employees need to dip into their savings until the shutdown ends and they can receive compensation.

"Every employee should have a minimum of six months of their average monthly expenses in a liquid savings account or a money market account. The way things are going right now, I'm more inclined to say employees should have a year's worth of savings set aside. Because it seems like these things are popping up all the time now," Zurndorfer said.

Think twice before borrowing against your TSP

"I'm a firm believer that one should not borrow against one's TSP," he said.

Zurndorfer said borrowing against the TSP is a "double whammy" during the shutdown. Because feds are not receiving pay, they can't contribute to the TSP. So, the TSP account loses in two ways.

Once they go back to work, employees have to put additional money back into the TSP in order to get matching for retirement.

Some bills don't need to be paid right away

Utility bills usually have a grace period, so they do not need to be paid right away.

"Usually when it comes to a mortgage, they give you a 15 day period to pay it," Zurndorfer said. But, he said, be sure to pay them by the deadline to avoid a late penalty.

Consult an accountant before filing for unemployment

"There's only one downside to unemployment — that it's fully taxable," Zurndorfer said. Employees are required to pay federal and state taxes on any amount of unemployment insurance they receive.

"There is talk that employees might get paid retroactively," he said. In that case, the employee would have to pay tax on the unemployment insurance in addition to taxes on their pay.

Zurndorfer advises federal employees to consult with an accountant to estimate tax payments and ensure they will have enough funds to pay both taxes.

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