Sequestration: The Real Life Family Impact

charlie_image**The following guest post is from my good buddy, Jeff! Jeff is a local fireman for our federal government, and talks first hand about how the sequestration has affected his family. He talks about the steps his family has taken to minimize the impact of this on his family's finances.**

Hello my fellow financially conscious friends, my name is Jeff, I’m a government employee, a proud new father, and finally, I’m a financial sponge that just survived the dreaded “Sequestration”!  The word “Sequestration” just burns when it rolls off my tongue. 

The first news we received of the furlough was back in February, my wife and I were contemplating her going back to work after completing her maternity leave.   I was at home when one of our friends called us with the news that we were facing the possibility of losing up to 40% of my income.   Just a couple weeks prior to this my wife turned down a financially lucrative offer to return to work.   We had to seek God’s guidance on this decision because we were too emotionally invested to really clear our heads.

The options were:  me taking a second job, cutting off unnecessary expenditures, or the worst-case scenario living off our savings. This was a three-headed war that was being waged in our family.   First, my wife and I really wanted her to stay at home for the first year with our daughter.   Second, how much we could we afford before we financially collapsed?  Third, how are we going to be proactive to ensure our financial survival?  This was a tremendous amount of stress to handle.  If it wasn’t for our good friends, and a heaping dose of prayer I doubt we would have come up with any solutions.  For the first couple of months there weren't any concrete answers on how the furlough would be administered.  This only drove up speculation and rumors.  In the meantime I sold my beloved Harley Davidson.  In “MAN LAW” I had committed the ultimate offense, but the Harley wasn't paying my bills. Selling the bike was a no brainer for me.

In July the furloughs were set to begin and after numerous discussions, we did come to a conclusion.  I would use the two years left on my Post 9/11 G.I.  Bill and go back to college.  This served two purposes, first is I would be more marketable, and second, the housing stipend would replace the income we would be losing.

Here are some action steps we took and some tips to consider when life throws you a fast one :

  • PAY OFF DEBT – While I was getting a full paycheck we aggressively paid off any fluid debt, i.e. Hospital bills, credit cards, etc. We also had a contingency plan in place if we needed it. EVERY FAMILY SHOULD HAVE A BACKUP PLAN AND A BACKUP PLAN TO THAT.
  • HAVE OPEN AND HONEST LINES OF COMMUNICATION BETWEEN YOU AND YOUR SPOUSE. Finances can be tremendously taxing on a family so take the time to really invest in one another.
  • SEEK ADVICE & DON’T GO AT IT ALONE— we reached out to trusted friends, they listened to our concerns and helped us keep the emotion out and focus on the numbers.

Now that the furlough is over my wife and I took an inventory of what we learned. NOTHING IS GUARANTEED. One thing we learned is our identity is not in what we have.  Sequestration invigorated our passion for financial responsibility while learning from our mistakes and successes.  Despite all that has occurred in the last six months, I am thankful that Sequestration happened.  Be alert, make solid decisions, and stick to them, it takes a little discipline but it’s well worth it.

So this is Jeff's account of how sequestration has affected his family and the steps he's taken to minimize its impact. How have you been affected or how do you prepare for income variations like this?

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  1. Pops I think your advice is spot on! We live pretty modestly and work our tails off, and we are really proud of. We learned some painful lessons from this but are well aware it could have been much worse. They are already saying that next years furloughs could be more dramatic and we will be prepared.

  2. @Pops I really like that advice.

  3. Get out of debt! Get out of debt! Let me say it another way: Get out if debt!
    Your family can weather a multitude of storms if you don’t owe anybody. As an old guy looking back, I can say that the most freeing moment of 40 years of marriage was when we paid off the mortgage. No matter what stupid stuff the government comes up with next, we have always got a place to live! Ask God to show you how to do it. He will!

  4. Thank you all for your positive replies! What rally drove up the intensity in this situation was just having our daughter. We we are already physically and mentally worn before any news of the Sequestration. I truly believe that having a sound and logical plan in place is the key to working through these situations. I can’t tell you how many times we went to the note pad to scratch out ideas. Finally relaxing and having faith that you will make it through.

  5. Jeff,
    Great article. We faced a similar situation several years ago when my wife, who makes 3X more in salary than I do, was faced with a 20% reduction in her pay – due to government furloughs. We had just put our youngest thru college, helped them with a down payment on their house and they had a baby on the way (which they needed some financial assistance with due to medical problems). In addition, our youngest was just heading off to college. We didn’t know what to do, so what we did do was pray, breathe deeply and take it one day at a time. Several years later, she still hasn’t gotten her original salary back and you know what? We’re doing BETTER financially now because of this experience. We got very serious about a budget and started being much more frugal than we had been in the past. That reduced income/furloughs etc turned out to be a blessing in disguise. Breathe and trust. I’m sure it will work out just as well for you guys – although I totally get that initial panic. Best of luck.

  6. It is so true about job security. There is NO job security. And it is extremely important to have back up plans as you stated. I have found a great backup plan to be network marketing. I am not endorsing any particular one but I am part of several and they have provided me additional income EVERY month.

  7. A lot of great lessons here, Jeff. In particular, I think making a contingency plan is an important tip. Having a financial plan is great, but life never goes as you plan it. Many financial crises occur not when things are going as expected, but when, as you put it, life throws you a fast one. Plan for those! Thanks for sharing — it sounds like you made good choices.

  8. Jeff, thanks so much for sharing your story. I love what you about nothing being guaranteed. No job is secure, really, but thankfully, the Lord is faithful and true. If there’s one thing we’ve learned through the years, it’s to seek His guidance and direction for the right path. You guys did that and it paid off.

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