Facing a furlough? Develop a plan
Cooperative Extension national Web site offers help to those facing temporary layoff
University of Nevada Cooperative Extension is offering helpful advice to furloughed workers through eXtension.org, the collaborative Web site that brings together the expertise of university educators across the country.
Furloughs, once used primarily by employers of blue-collar workers when construction or auto-assembly work slowed down, are being used extensively for white-collar workers as governments, colleges and corporations struggle with declining revenues in the current economic downturn. A furlough is time off without pay. This is a better option than a pay cut or layoff because it is a short-term, temporary loss of pay.
In an article on eXtension.org, Dr. Barbara O’Neill of Rutgers Cooperative Extension says furloughs are seen as a more "humane" alternative to permanent layoffs. Not only do many workers get to keep their health benefits during a furlough period, furloughs also enable employers to retain skilled employees needed when the economy rebounds. Large employers cutting just a few days of their workers’ pay can often save millions of dollars.
Although the forms furloughs take varies, O’Neill advises furloughed workers to take several steps to adjust to the income they are losing, including:
- Calculate what you earn in a day so you can adjust your spending accordingly.
- Find out when and how your pay will be reduced and the procedures that your employer has established for taking time off.
- Try to gradually save up the amount of money that you will lose by reducing expenses. Put this money in a money market fund or short-term CD until it is needed.
- Try to reduce monthly expenses by the amount of lost monthly income. Trim variable expenses first — such as food, clothing and entertainment.
- Consider temporarily suspending or reducing voluntary payroll deductions.
- Consider moonlighting to recoup the lost income.
University of Nevada Cooperative Extension’s Jeanne Hilton, a Professor of Social Work, recommends that workers who don’t plan to work a second job during a furlough should still put the time to good use. In the weeks leading up to your furlough, make a list of some of things you’d like to accomplish during your time off. But don’t overdo it.
"There are two basic ways to deal with loss of income — earn more or spend less," Hilton says. "When you have the extra time, convert it to cash. Think eBay! Take the time to get rid of all that clutter in the house and garage and sell it on online or in a garage sale. Spend less by cooking at home, trading services with friends and taking advantage of free community activities and the library. Get together with friends for a pot luck picnic in a park and have fun. If you plan ahead, you can make good use of the time off and enjoy a welcomed break from work."