WASHINGTON, D.C. (The Wall Street Journal) — How far would your money go if you suddenly missed a paycheck or two—or more?
The answer you arrive at is your personal “burn rate,” and it is a calculation that hundreds of thousands of federal workers are now confronting. So are more private-sector employees as the job market cools and layoffs creep upward: The U.S. lost 32,000 private-sector jobs in September, payroll-processing company ADP said this month.
Much like a startup trying to control monthly spending before it can achieve profitability, there are ways to slow your own burn rate. For many Americans without emergency funds, that is essential: Just under two-thirds of U.S. adults have enough cash on hand to cover a $400 surprise expense, according to a 2024 Federal Reserve survey.
Meanwhile, the White House has asserted that furloughed federal staffers might not be guaranteed back pay once the shutdown ends, though Republican congressional leaders and guidance from some government agencies have said back pay would be owed to those workers.
Here’s how to reduce your burn rate:
Cut your spending in sprints
On one level, the task is easy: Just spend less. But financial planners have advice for avoiding common psychological snags.
Joe Young of Mercer Advisors is having his clients in the Washington, D.C., area think about reining in spending over a three-month time horizon. That period makes the cuts feel doable.
“If we say it’s in perpetuity, it’s a little bit harder to stomach,” he said.
Three months is also enough time to come up with more drastic changes if needed, he said.
Your austerity measures also don’t have to be completely austere, said Kevin Mahoney, a financial planner in D.C.
If your situation permits, he said, “pick two or three expenses that you are like, ‘I would really like to do everything I can to not give these up right now.’ ”
Mahoney said some clients feel distressed about hitting pause on financial goals they have been working toward for years, such as contributing monthly to a fund for a down payment on a house.
“If I stop my 401(k) payment for two months, it’s not the end of the world,” he said.
Turn off autopilot
Scour for transactions that happen when you aren’t looking, such as monthly subscriptions and automatic bill payments.
“We’ve seen this proliferation of expenses essentially happening in the background,” said Wendy De La Rosa, a marketing professor at the University of Pennsylvania’s Wharton business school.
Several tools help people examine their recurring bills. Rocket Money, one such app, said users who canceled unwanted subscriptions saved an average of $378 in the 12-month period ended in March 2024.
Unplugging autopay can also make you more cognizant of where your dollars are going, De La Rosa said. Households with automatic payments set up for their electric bills, for example, used 4% more electricity, according to a study in the Review of Economics and Statistics.
Though housing and transportation account for half of U.S. households’ spending, according to Labor Department data, discretionary items add up. Entertainment, apparel, personal care and food away from home make up nearly 14% of households’ outlays.
Call your creditors
If you expect to have trouble making payments on your housing, car, credit card, student loans or utilities, you can try to negotiate for some flexibility.
A creditor, for example, might let you briefly pause your payments without harming your credit score.
Creditors might also be more flexible if you are furloughed, versus laid off, said Bruce McClary, a spokesman for the National Foundation for Credit Counseling, which represents nonprofit credit-counseling agencies. And some creditors could have options that you wouldn’t know to inquire about specifically.
“It’s always a good question after they run through the list…to ask them if there’s anything else that they have to offer,” McClary said.
Some 83% of consumers who requested a lower interest rate on a credit card were granted one, shedding an average of 6.7 percentage points, according to a May survey from LendingTree.
A nonprofit credit counselor can help you navigate the thicket of options that different creditors might offer on different types of debt. Experts advise reaching out to creditors early on, because you might be ineligible for certain accommodations once your payment is past due.
Steven Dahlgren, a contract specialist with the U.S. Forest Service, worked with the agency during the 35-day shutdown in 2018-19. During that time, he called his mortgage lender and told it he was furloughed—and still had a job—but wouldn’t have a paycheck for the foreseeable future. He pledged to make back payments once his checks resumed, which he said the company agreed to, and allowed him to defer payments.
Dahlgren has more savings now than he did during the previous shutdown. Still, he has cut back on eating out and buying new clothes, keeping spending to the bare minimum.
If the situation continues for more than 30 days, “that’s when the squeeze will really start to come on,” he said.
Be careful applying for unemployment
Many furloughed federal workers—even if they will receive back pay at some point—can apply for unemployment in their home state or district, but rules vary. Some states have a one-week waiting period before they begin to pay out benefits. Essential employees who are required to work without pay, such as air-traffic controllers and Transportation Security Administration officers, aren’t eligible for unemployment benefits.
Former federal civilian employees filed more than 55,000 initial claims for unemployment benefits in January 2019—during the previous shutdown—according to Labor Department data from that time. The data doesn’t break out how many were furloughed or how many had left their agencies before the partial government shutdown.
As the shutdown continues, more cash-strapped federal employees could apply for benefits, said Michael Fallings, managing partner at Tully Rinckey.
But this cash comes with strings attached. Once the shutdown ends and workers receive back pay, employees need to pay back their unemployment benefits. It is up to the employee to contact their state’s labor department and repay in accordance with the rules.
Otherwise, keeping the benefits is considered overpayment, which leaves you subject to penalties that could prevent you from receiving future benefits. Additionally, some banks and credit unions are offering short-term, interest-free loans for government workers affected by the shutdown.
