A recent article in The New York Times looks at the growing trend of forced furloughs, which is basically unpaid time off. The article introduces us to the Ferrell’s, a California family who have seen about a 10% cut in income because of imposed furloughs two days a month.
While the unemployment rate is up, millions more Americans are simply seeing their paychecks shrink slightly. This is forcing them to live on less, cut out unnecessary items from their budgets like children’s dance lessons, cable TV and regular hair cuts. According to the Bureau of Labor Statistics, about 6.7 million people were working fewer than 35 hours in April because of “slack work or business conditions.” That number is nearly double compared to April of 2008. More than five hundred large companies were recently surveyed about instituting pay cuts. Sixteen percent had cut employee pay and 20 percent had cut hours or imposed furloughs. This is a significant increase compared to previous years.
If your family has experienced a pay cut, what are you giving up in order to make your new budget work? Do you have a plan in place in case this happens to you?
If a furlough is likely or even a possibility for you or your spouse, you may want to consider doing the following:
* Calculate how much income you may lose if a furlough is applied.
* Build up your emergency fund. Starting saving more.
* Be proactive by lowering expenses now. Consider cutting memberships or ways to reduce monthly bills.
* Stay positive. Many people are experiencing similar cutbacks. You are not alone and you will make it through!