How to Manage Your Finances During a Government Shutdown

1. Understand Your Back Pay and Unemployment Eligibility

Back pay and unemployment rules for federal employees during a government shutdown depend on whether you are categorized as excepted or furloughed. (Exempt employees, a third category, keep working and receive pay during a shutdown.)

• Excepted employees are considered essential and continue working during a shutdown, but don't get paid during that time and are not eligible for unemployment benefits.
• Furloughed employees don't work during a shutdown and don't get paid, but may qualify for unemployment insurance through the Unemployment Compensation for Federal Employees (UCFE) program. You must apply for unemployment benefits through the unemployment office in the state where you work. Keep in mind that once a shutdown starts, you may lose access to online documents you need to apply for unemployment. Be prepared by printing proof of your wages as well as your SF-8 or SF-50 forms before the shutdown.

Under federal law, both furloughed and excepted employees will receive back pay for the shutdown period as soon as possible once the shutdown ends. If you were furloughed and received unemployment benefits, you may need to pay this money back once you've received your back pay.

Federal contractors whose projects are canceled or paused due to a government shutdown may furlough their employees, reduce their hours or ask them to use paid time off. Employees of federal contractors are eligible for state unemployment benefits, but are not guaranteed to receive back pay, although legislation to guarantee them back pay has been introduced.

Learn more: Does Filing for Unemployment Affect Your Credit?

2. Cut Back on Expenses

Review your monthly expenses to figure out what's essential and what isn't. Generally, essential expenses include:

• Housing
• Insurance
• Utilities
• Food
• Transportation
• Health care
• Child care
• Debt payments such as loans and credit cards

Look for ways to save on both essential and nonessential expenses, such as:

• Pausing or canceling subscriptions such as cable TV or streaming services or negotiating lower rates
• Cooking at home and buying groceries on sale instead of eating out
• Carpooling or taking public transit to work to reduce commuting costs if you are still working
• Doing a no-spend challenge to eliminate all nonessential spending during the shutdown
• Finding free entertainment options such as going to the park or checking out movies from the library
• Joining a buy-nothing group to find things you need for free

Learn more: How to Create a Bare-Bones Budget

3. Use Your Emergency Fund

Situations that involve a loss of income or benefits are what your emergency fund is for. Watching your emergency fund dwindle can be stressful, but just remind yourself that you'll rebuild the fund when the shutdown is over and you start getting paid again.

Learn more: What to Do When Your Emergency Fund Runs Out

4. Communicate With Your Lenders and Service Providers

If you think you may be late on payments or have trouble paying your bills at all, contact your lenders and service providers right away. They may offer forbearance, deferment or other options that can lighten your financial burden.

Both loan deferment and loan forbearance allow you to pause or reduce loan payments for a certain period. The specific terms can vary depending on the lender and type of loan, but interest typically continues to accrue during this time. You may be eligible for deferment or forbearance on mortgage loans, auto loans, student loans and other installment loans, as well as on credit cards.

Utility companies may offer partial payment arrangements, allow you to defer payment or even provide funds to help pay your utility bill.

Learn more: What to Do if You Can't Pay Your Essential Bills

5. Explore Financing Options

Because government shutdowns are typically short-lived, getting a loan with a 24- or 36-month repayment term doesn't make much financial sense. However, some banks and credit unions provide short-term loans or lines of credit, often at 0% interest, for federal workers and military servicemembers impacted by shutdowns. Check with your financial institution or investigate options from:

• Air Force Aid Society (AFAS)
• Army Emergency Relief (AER)
• Coast Guard Mutual Assistance (CGMA)
• First Command
• Navy-Marine Corps Relief Society
• PenFed Credit Union
• United States Senate Federal Credit Union (USSFCU)
• Navy Federal Credit Union
• FedChoice Federal Credit Union
• Congressional Federal Credit Union
• USAA

Short-term loans such as payday loans, auto title loans and high-cost installment loans can be easy to get, but it's best to avoid them. These loans typically have high financing costs and require weekly or monthly payments, which are difficult to manage while your income is paused. It's also best to avoid credit card cash advances, which charge fees, accrue interest immediately and usually have higher APRs than credit card purchases.

If you have good to excellent credit, consider applying for a credit card offering a 0% introductory annual percentage rate (APR) on purchases. Use the 0% intro APR card for expenses during the shutdown and you won't incur any interest as long as you pay off the balance before the introductory period ends. (At that point, your remaining balance will begin to accrue interest at the card's standard APR.)

Learn more: How Do 0% Intro APR Credit Cards Work?

6. Seek Financial Assistance

Federal programs such as the Supplemental Nutrition Assistance Program (SNAP), the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) and the Low-Income Home Energy Assistance Program (LIHEAP) may run out of funds during a government shutdown. If you normally rely on these benefits, you can use the following resources to find other assistance programs that help pay for food, housing, utilities and other essentials.

• Visit the 211 website or text 211 to find and sign up for assistance programs in your area.
• Use the benefits finder tool at Benefits.gov to see if you qualify for state or federal assistance programs.
• Find local food banks and food pantries at Feeding America.
• Find local diaper banks at the National Diaper Bank Network.
• Find assistance for homeowners at Homeowner Help.
• Find your state's social services agency.
• Contact your child's school or school district to see if you are eligible for the National School Lunch Program.
• The Federal Employee Education & Assistance Fund (FEEA) offers emergency grants and loans for eligible federal workers.

You can also contact your local government offices and reach out to local charitable or religious organizations that may offer financial and other types of assistance.

7. Protect Your Credit

Financial woes during a shutdown can lead to late or missed payments, which can rack up late fees or trigger a high penalty APR. Worse, just one debt payment missed by 30 days or more can cause a significant drop in your credit score. To protect your credit, try to make at least minimum payments on your credit cards. You can set up credit card autopay to ensure your minimum payment is on time each month.

If you haven't already done so, now is also a good time to take advantage of Experian's free credit monitoring services. You'll get alerts of important changes to your Experian credit report and activity that could signal fraud, such as new applications for credit.

What to Do if Your Credit Score Drops During a Government Shutdown

If negative items on one or more credit accounts have hurt your credit score, you may want to add a personal statement to your credit report. When lenders check your credit, they can read this "statement of explanation" for context about the reason your credit score decreased. You can add a general statement, which applies to your entire credit history, or an account-specific statement, which applies to one credit account.

To add a personal statement to your credit report, follow these steps:

1. Log in to your Experian account.
2. Visit the Dispute Center and select the "Start a new dispute" option.
   • To add an account-specific statement, go to the "Accounts" tab and select the relevant account. When the dispute drawer opens, scroll to the bottom and select "Add statement."
   • To add a general statement, go to the "Personal Information" tab, scroll down the "Personal Statements" section and select "Add personal statement."
3. Select the applicable statement and submit the added statement as a dispute.

Once your statement dispute is processed, you'll be notified via email and online account alerts.

Learn more: How to Manage Payments if You're Unemployed

8. Protect Your Identity

Unfortunately, criminals often take advantage of government shutdowns to scam those affected. To safeguard against identity theft, practice good security habits such as using strong passwords or passkeys, not sharing sensitive information and being vigilant against phishing, smishing and vishing scams.

Regularly reviewing your credit report is a good way to spot potentially fraudulent activity, such as a new credit card account you don't recognize. You can get a free credit report from each of the three major consumer credit bureaus (Experian, TransUnion and Equifax) once a week at AnnualCreditReport.com. You can also get your free credit report from Experian anytime.

You also have the right to place a fraud alert or credit freeze on your credit reports.

• A fraud alert instructs creditors to take additional steps to verify your identity when someone applies for credit using your name. If you place a fraud alert with one of the three national consumer credit bureaus, the other bureaus are notified and add a fraud alert to their reports.
• A security freeze, also known as a credit freeze, goes a step further by limiting access to your credit report. Once your credit is frozen, you'll need to unfreeze it to apply for credit. Credit freezes must be placed and lifted with each credit bureau separately.

What if, despite your best efforts, you're a victim of identity theft? Normally, identity theft should be reported to the Fair Trade Commission (FTC) at IdentityTheft.gov, but this may not be an option during a government shutdown. If you can't report fraud to the FTC, you should file a report with your local police department. Having a police report can help you dispute fraudulent charges and prove your innocence if the fraud leads to other crimes.

In addition to filing a police report, you may also need to contact:

• Each credit account where you spotted fraudulent activity
• The bank or credit union where you noticed unauthorized transactions or new account openings
• Your state's tax department and/or the IRS if you're a victim of tax fraud
• Your state's unemployment agency if someone filed for unemployment benefits in your name

Learn more: How to Check for Identity Theft

Frequently Asked Questions

Be Prepared

A government shutdown can be stressful and disruptive if your income or benefits are affected. Fortunately, there's typically plenty of warning before a government shutdown begins. Tightening your belt at the first sign of dark clouds on the horizon, building an emergency fund and exploring alternative sources of assistance can help prepare you to ride out the storm.