Productive Leaders

Ph.D., CSP, CDR, US Navy Ret.,
CPAE Speaker Hall of Fame

Mary’s Weekly Articles and Valuable Tools

Subscribe below and get Dr. Mary Kelly’s
weekly newsletter in your inbox.


Suddenly Unemployed or Furloughed?
How to prepare for a sudden loss of income

Businessman Thinking on StepsAlmost 1,000,000 US federal workers suddenly found themselves temporarily jobless this week, and hundreds of thousands more are affected with lost income due to the government shutdown. 

Restaurants, dry cleaners, retail stores, gas stations, other DoD contractors (Lockheed Martin is laying off 3,000 workers) and all kinds of other workers are losing paychecks because the US government workers are not working.

People who work on commission and self-employed people are often accustomed to fluctuations in income levels. Recent data indicates 25% of Americans are working as contractors. That number is due to rise to 40% in the next 10 years, so even more people are learning to manage budgets on irregular paychecks.

How do we prepare for a sudden loss of income? What if a contract doesn’t happen, or we get stuck with supplies for a job that gets canceled?

Ideally, according to financial planners, we all have 3 to 6 months of income set aside as cash in an emergency fund.

But what if we don’t? What do we do if we suddenly face a job loss or a few absent paychecks?

1. Don’t panic. View this as an opportunity to gather up all household expenses and bills and organize them, so you know what you’re dealing with. Make sure you know all of your expenditures. 

2. Create a spending and a savings plan that prioritizes what you absolutely need. Separate your needs from mere wants. Be ruthless. Get everyone in the family involved. 

3. Eliminate every day-to-day expense that you don’t absolutely need. If you don’t absolutely need it to survive, cut it, cancel it, or curtail it.

To find savings you may want to look at reducing or eliminating spending on: new clothes and shoes, eating out, drinking out, movies, gym membership, additional cell phone expenses, cable, and any expensive sport or activity such as golf, zip lining, or skiing.

4. Make sure you prioritize your spending plan to allocate cash to the important items that you really need. Necessary expenses might include categories such as food from the grocery store, the mortgage or the rent, taxes, gas or electricity for the home, water and trash, the minimum payments on credit cards, car payments, and insurance on the car, the house, life, medical and dental insurance.

5. If the income loss is going to be long-term, more permanent changes might be necessary. 

6. Look hard at long-term expenses. Now is the time to possibly cancel Christmas or summer vacation, and indefinitely delay buying a new car and other large purchases. If the car payments are suddenly a problem get rid of it and get a more affordable vehicle. 

7. If you pay other people to do work for you, now might be the time to go back to the do-it-yourself mode. Go back to mowing your own lawn, cleaning your own house, and making fewer trips to the dry cleaners, the barbers, and the coffee shop.

8. Talk to your bank about an automatic line of credit that backs up your checking account, so that any automatic payments will be covered. You don’t need an unexpected fee on top of everything else. 

9. Call the credit card companies and ask them to lower your APR – the Annual Percentage Rate. Getting a better interest rate BEFORE you have debt helps, and if you already have debt, it really helps. 

Remember that there is no grace period if you have ANY balance on credit cards, so the minute you put a purchase on a credit card, you start accruing interest.

Being without income creates uncertainty and angst. Manage it by taking action and taking control.


  1. Deanna

    This situation is affecting a great many of my friends, so I’ve shared it. Thanks for writing it. There’s a lot of great information here!

  2. Sharon O'Day

    Nothing better than being proactive … when it feels like everything else that’s happening around you is out of your control! No room for paralysis! Thanks for these “actionable” steps, Mary; I’m sharing this on my FB with my readers …

  3. Mary Kelly

    Thank you, Sharon! I appreciate that you also work to help people be financially independent!


Submit a Comment

Your email address will not be published. Required fields are marked *