Basic Budgeting During the Furough

It is time to cut the fat out of your budget. If you have never made a budget, today is the day to start. This situation will not last forever, but it isn't going to be fun right now. Hang in there everyone, we will get through this. It is time to figure out where your money goes and when. You have got this! We are here with you through it!

Alex

I would like to introduce you to Alex Carter. He is an E-2 stationed in Nebraska. He, like all federal workers, is concerned with the current federal shutdown and how that will affect his budget. He is not making much money, he lives in the dorms, so he doesn't have rent or utilities to pay. He does have a car payment, insurance, gas, cell phone, food, and pays for upgraded high speed internet in his room. That means he doesn't have a lot of bills, but it also means he doesn't have a lot of room to cut costs. We are going to use Alex as a representation of many people who are in the same or similar situation and could use some insight into their finances. We will look into his budget, how much money he makes, where he spends it, and where he should save some of it. Now is a unique time to introduce you to Alex, but I believe it will help give other perspective on what is going on with their own paycheck and how they can make them go further.

As an E-2 Alex make 2,599.20 per month gross (before taxes). He is making $2172.28 after taxes. He puts 5%, or $130.00, into his Thrift Savings Plan (TSP) leaving him $2,064.36 per month. His paychecks average $1,000.00 twice a month.

Alex has a car payment that is $614 per month, with insurance it totals $750. That eats up most of one of his paychecks. High speed internet is $50 per month, cell phone is $100, and gas averages $200. He would like to have an emergency fund of $5000 eventually.

After paying all his bills he has just over $950 for food and savings per month. That is pretty good. His bills come out to less than 50% of his net income. The issue is his biggest bills take up almost an entire paycheck, and it is another two weeks until he gets paid again. After paying the vehicle payment and insurance he only has $250 for the next two weeks. That has to cover gas, food, any pop up expenses that may come up.

Some banks will allow you to make partial payments on vehicles, many will not. In this example Alex is not able to do that. He must pay it in full at one time.

Alex has paid his vehicle payment this month, so he doesn't have to be concerned about it yet. However, he doesn't have enough in savings to cover another month if he doesn't get paid between now and the 1st.

He has decided to spend as little as possible until the furlough ends. The $1000 paycheck he last received still has $125 left after paying for gas and food for two weeks. He has not paid his phone bill, internet, or had any paid social activities.

Alex has called both his cell phone company and internet service provider and was given a 1 month extension for the payment on each of them. Should his pay be reinstated before then, he will be able to pay them on the original due date or shortly thereafter. Companies are often willing to make these options available to consumers if they ask early. They are well aware of the current situation, and would prefer for you to reach out to them now instead of waiting until you have a problem.