As pressure on private and public organizations to trim costs mount, managers are looking into ways to reduce expenses while preserving staff. One of the increasingly popular strategies is placing employees on a furlough – a temporary leave of absence, often unpaid. USAToday is asking readers to email in the various ways in which they are spending their time off from work due to a furlough. Here’s a list of the top five ways someone in debt can make productive use of their furlough.
1. Get organized. One of the biggest obstacles from a behavioral standpoint to reducing debt is being caught in an unorganized environment, where one might not know where paperwork is located, while suffocating in a cluttered home and/or workspace. Overcome this by dedicating the first slot of time during your furlough towards getting organized. Achieve this through “baby steps” – organizing general piles, then more specific ones, etc. Get a stack of cheap file folders and start filing documents in different categories.
2. Formulate a financial plan, and specifically a plan to reduce debt. In the process of organizing your “stuff” keep the financial and especially debt-related documents all in one handy place. Dedicate an hour or two to simply reviewing them to get a general understanding of your debt status, e.g. accounts, amounts, locations, and interest rates. Set some quick priorities. One of the best ways to priortize is paying off the debt amounts with the highest interest rates first. This approach can be combined with the snowball method.
3. Take the time to cut out unnecessary yet recurring monthly expenses. A major impediment to trimming your discretionary expenses in order to make room for debt reduction payments is simply the time and effort involved in contacting the subscription providers, gyms, and other service providers that charge you automatically on a recurring basis. Dedicate some time during your furlough to make these calls and cancel the services. Not only can those funds saved be put to more productive use, recurring automatic charges are one of biggest roadblocks to effectively reducing debt.
4. Spend time with family. Take the kids on a hike, play board games, and support them in their school activities. The essence is to spend time with family that does not cost funds out of your pocket (other than your time). In the current environment, spending time together as a family helps to reduce stress by getting everyone on the same page and reiterating support for one another.
5. Restrategize on your income and job. Take on contract work. Hunt online for temporary gigs that are flexible enough that you can finish work by the time your furlough ends. These projects will generate cash for you while you wait for the paychecks to start flowing again. Also, prepare yourself for job elimination. If you’re on a furlough, that may presage losing the position. Refresh and retool your resume, write sets of generic cover letters that can be quickly customized for different opportunities. Prepare a short job-hunting strategy, just in case. Work and debt are deeply interrelated since your ability to generate income impacts your debt reduction success and vice-versa.
Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
