As a govt employee, should I have a larger EF?

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tomwood
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As a govt employee, should I have a larger EF?

Post by tomwood » Sun Nov 24, 2019 2:35 pm

As federal shutdowns become more frequent in recent years, what do the employees on here do to be ready for those days/weeks/months? Is it as simple as dipping into your 3-6 month emergency fund? Or do you have more than 3-6 months due to frequent shutdowns? And can I safely assume this money is all in a savings account, not invested?

I ask for personal reasons as I’m a new government employee and not sure what might happen at the end of December and I want to be ready. I’ve never experienced a govt shut down or the like. Any advice to help me be ready would be a help.

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Re: As a govt employee, should I have a larger EF?

Post by retiredjg » Sun Nov 24, 2019 2:41 pm

Shutdowns are usually a few days and everybody gets paid even though only a few actually have to work.

I can only remember 1 shutdown in the last 20 or 30 years which caused a delay in paychecks. I could be wrong, but the number is not great.

If you've got an emergency fund, you'll be fine. No need to increase it.

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Re: As a govt employee, should I have a larger EF?

Post by petulant » Sun Nov 24, 2019 2:45 pm

Most of the time, being a government employee means a lower need for EF due to greater stability compared to the private sector. I wouldn't extend an EF just because of shutdowns.

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tomwood
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Re: As a govt employee, should I have a larger EF?

Post by tomwood » Sun Nov 24, 2019 2:57 pm

retiredjg wrote:
Sun Nov 24, 2019 2:41 pm
Shutdowns are usually a few days and everybody gets paid even though only a few actually have to work.

I can only remember 1 shutdown in the last 20 or 30 years which caused a delay in paychecks. I could be wrong, but the number is not great.

If you've got an emergency fund, you'll be fine. No need to increase it.
The only one that comes to my mind was recently, maybe two years ago. And I thought I read articles about people not being able to pay their mortgage, etc. so I thought all shutdowns meant no one gets paid but still has to go to work. And then weeks or months later the wages from the shutdown days are payed to the employees for working. Is that not typical? I’ve never personally experienced one, but remember articles from the recent shutdown

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tomwood
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Re: As a govt employee, should I have a larger EF?

Post by tomwood » Sun Nov 24, 2019 2:58 pm

petulant wrote:
Sun Nov 24, 2019 2:45 pm
Most of the time, being a government employee means a lower need for EF due to greater stability compared to the private sector. I wouldn't extend an EF just because of shutdowns.
Would you suggest 1-3 months for EF?

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Re: As a govt employee, should I have a larger EF?

Post by retiredjg » Sun Nov 24, 2019 3:07 pm

tomwood wrote:
Sun Nov 24, 2019 2:57 pm
The only one that comes to my mind was recently, maybe two years ago. And I thought I read articles about people not being able to pay their mortgage, etc. so I thought all shutdowns meant no one gets paid but still has to go to work.
That is the only one remember where people didn't get paid on time. Yes, it was a bit of a mess, but anyone with an emergency fund should have had no trouble. The fact that people could not pay their bills meant they didn't have an emergency fund.

In a government shutdown, only a few people work - law enforcement, fire fighters, and a few others others considered "essential". The rest of the work force stays home and gets paid.

And then weeks or months later the wages from the shutdown days are payed to the employees for working. Is that not typical?
Not at all. They are usually paid on time or a few days late. Even last time, I think it was only a couple of weeks, wasn't it?

Edited to add: Wikipedia says this last mess was worse than I remember (I was already retired).

https://en.wikipedia.org/wiki/Governmen ... ted_States
Last edited by retiredjg on Sun Nov 24, 2019 3:14 pm, edited 1 time in total.

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Re: As a govt employee, should I have a larger EF?

Post by delamer » Sun Nov 24, 2019 3:10 pm

tomwood wrote:
Sun Nov 24, 2019 2:58 pm
petulant wrote:
Sun Nov 24, 2019 2:45 pm
Most of the time, being a government employee means a lower need for EF due to greater stability compared to the private sector. I wouldn't extend an EF just because of shutdowns.
Would you suggest 1-3 months for EF?
One month is fine to cover potential shutdowns, assuming that the only purpose of the emergency fund is cover a temporary loss of income.

You might want a larger EF to compensate for the lack of short & long term disability coverage, especially as a new employee.

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Re: As a govt employee, should I have a larger EF?

Post by yangtui » Sun Nov 24, 2019 3:16 pm

speak with your coworkers to see what happened during previous shutdowns and how things were handled. that is how i would answer your question.

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Re: As a govt employee, should I have a larger EF?

Post by 02nz » Sun Nov 24, 2019 3:20 pm

Technically, 1) you don't need a larger EF because of the possibility of shutdowns, but 2) you may need a bit more cash on hand (in the account that pays bills) to be prepared for the possibility of a delayed paycheck or two. Some may not distinguish between the two, that's fine too. Realistically, if you have a reasonable EF, #2 isn't really even necessary. If your finances are such that one or two missed paychecks will cause you to not be able to make a mortgage payment or put food on the table, then you have bigger problems.

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Re: As a govt employee, should I have a larger EF?

Post by bluquark » Sun Nov 24, 2019 3:21 pm

On the one hand, you are more likely than a private sector employee to be furloughed. On the other hand, this is less likely to coincide with market turmoil.

Therefore, I think you should have money in Roth or taxable for use during government shutdowns, but it could be in stocks instead of cash if you are young and want to keep a high AA. It seems really unlikely for a shutdown to happen after stocks have just had a huge crash.
Last edited by bluquark on Sun Nov 24, 2019 3:24 pm, edited 2 times in total.
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Re: As a govt employee, should I have a larger EF?

Post by whodidntante » Sun Nov 24, 2019 3:23 pm

If I had a flighty, unreliable employer like the federal government or a corporation, I would want to make sure that my ability to eat hamburgers, pay my mortgage, and drink whiskey were not tied to my paychecks. So I need access to money until I get a paying job or my employer becomes solvent again.

That doesn't mean you have to have six months of expenses as cash in a low-yielding taxable savings account. If you have a lot of money in taxable, equity index ETFs will do just fine, and you can keep your fixed income in tax-deferred accounts to achieve your desired asset allocation. Do you have credit cards? Those can be used to buy whiskey interest-free until your trade settles.

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Re: As a govt employee, should I have a larger EF?

Post by FedGuy » Sun Nov 24, 2019 6:49 pm

tomwood wrote:
Sun Nov 24, 2019 2:35 pm
Is it as simple as dipping into your 3-6 month emergency fund?
For me, it was as simple as dipping into my 12 month emergency fund. The same 12 moth emergency fund that got me through a year of unemployment during the Great Recession.

The most recent shutdown was calamitous for many people who didn't deserve what happened to them. For me, it was a productive and relaxing vacation.

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Re: As a govt employee, should I have a larger EF?

Post by galawdawg » Sun Nov 24, 2019 7:27 pm

tomwood wrote:
Sun Nov 24, 2019 2:57 pm
retiredjg wrote:
Sun Nov 24, 2019 2:41 pm
Shutdowns are usually a few days and everybody gets paid even though only a few actually have to work.

I can only remember 1 shutdown in the last 20 or 30 years which caused a delay in paychecks. I could be wrong, but the number is not great.

If you've got an emergency fund, you'll be fine. No need to increase it.
The only one that comes to my mind was recently, maybe two years ago. And I thought I read articles about people not being able to pay their mortgage, etc. so I thought all shutdowns meant no one gets paid but still has to go to work. And then weeks or months later the wages from the shutdown days are payed to the employees for working. Is that not typical? I’ve never personally experienced one, but remember articles from the recent shutdown
Good for you for planning ahead. As a retired state government worker, I still recommend at least a three to six month emergency fund in liquid assets, such as cash, money market or a CD. While the federal government has always (thus far) retroactively paid employees for any missed pay (DW was a federal employee), some state and local governments have dealt with unpaid furloughs and even layoffs (Georgia is currently looking at furloughs again). So three to six months is a good buffer, not only in case of a shutdown, but also in the event of any other occurrence requiring quick access to funds where you don't want to be forced to sell stock when the market may be down, borrow from a 401k, etc.

I did find the media reporting interesting during the last shutdown in 2018-19. For example, on December 27, 2018, Fortune Magazine published... "but the shutdown blowback on gift giving and general Christmas fun were far from the most dire of Tweets. Many federal workers and their family members have reported problems paying for their rent or mortgage, and for medical care." But, since the first missed paycheck wasn't until January 11, 2019, any problems paying rent, mortgage or medical bills in December 2018 had nothing to do with the shutdown.

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Re: As a govt employee, should I have a larger EF?

Post by stoptothink » Sun Nov 24, 2019 7:36 pm

galawdawg wrote:
Sun Nov 24, 2019 7:27 pm
tomwood wrote:
Sun Nov 24, 2019 2:57 pm
retiredjg wrote:
Sun Nov 24, 2019 2:41 pm
Shutdowns are usually a few days and everybody gets paid even though only a few actually have to work.

I can only remember 1 shutdown in the last 20 or 30 years which caused a delay in paychecks. I could be wrong, but the number is not great.

If you've got an emergency fund, you'll be fine. No need to increase it.
The only one that comes to my mind was recently, maybe two years ago. And I thought I read articles about people not being able to pay their mortgage, etc. so I thought all shutdowns meant no one gets paid but still has to go to work. And then weeks or months later the wages from the shutdown days are payed to the employees for working. Is that not typical? I’ve never personally experienced one, but remember articles from the recent shutdown


I did find the media reporting interesting during the last shutdown in 2018-19. For example, on December 27, 2018, Fortune Magazine published... "but the shutdown blowback on gift giving and general Christmas fun were far from the most dire of Tweets. Many federal workers and their family members have reported problems paying for their rent or mortgage, and for medical care." But, since the first missed paycheck wasn't until January 11, 2019, any problems paying rent, mortgage or medical bills in December 2018 had nothing to do with the shutdown.
Interesting, but not in any way surprising. I can't imagine there are very many private employers who are overall more stable than the feds, this thread sounds kind of backward to me. Then again, never hurts to be prepared for anything.

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Re: As a govt employee, should I have a larger EF?

Post by Wiggums » Sun Nov 24, 2019 7:45 pm

If you have fixed income and available credit cards, I would not worry about shutdowns. There are many other reasons for having a larger emergency fund, but shutdowns is not one of them in my mind.

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Re: As a govt employee, should I have a larger EF?

Post by Ferdinand2014 » Sun Nov 24, 2019 9:37 pm

I am self employed. If I don’t work, I don’t get paid. I keep 2-3 years of cash in the form of T-bills. A government shut down appears to be a retroactively paid time off. 1-2 months of expenses would seem adequate. Health, job loss and large unforeseen expenses would seem a much higher priority.
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Re: As a govt employee, should I have a larger EF?

Post by Jerry55 » Sun Nov 24, 2019 10:51 pm

I worked for the US Gov, and in particular, the FAA since 1978, and have been thru 13 shutdowns (1978 - 1996) and fortunately retired in 2012, thereby missing the worst in 2013 and 2018.

Even though some were short, they were disruptive at the very least. Essential employees like myself HAD to report to work, whereas I saw my supervisors laugh and stay home because they were considered "Non-Essential". This last one that lasted for almost 2 months were the most devastating in that paychecks were missed for almost 3-4 entire pay periods, and sick leave nor annual leave were approved. I worked for the FAA (Federal Aviation Administration) and with 4 years USAF, retired with 39 years total.

Approx. 25% of FEDS were furloughed in 2018, so the pain was within a small fraction of the workforce. It also depends on what facility does paychecks (ours was the Dept of the Interior), and I can tell you that FAA was paid over 2 months late. To make it worse, we worked 24/7/365, so our paychecks varied widely, sometimes by as much as 20% or more.
When pay finally came back online, everyone took a hit, because Sunday Pay (25%), Holiday pay (100%), Night differential (10%) were omitted and peoples checks were smaller than usual, and it took 2-3 months for them to be compensated (lots of holidays from Nov-Feb). THEN, it took another 30-60 days for total compensation for shift differential and holiday pay. The dysfunction from supervisors laughing that they got paid for going on vacation took it's toll on the workers for certain. Very demoralizing indeed.
Many of us older workers had our homes paid for, but I saw the pain in the newer workers (I'm still a Union member and speak to them a lot). I could afford to go unpaid for 6-12 months, but they were certainly on edge, and for a good reason.

All I can say it....It's better to have it and not need it, than to need it and not have it. Many had to take loans or borrow from their TSP to survive. At the very least, I'd suggest 6 months for a comfort zone.
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Re: As a govt employee, should I have a larger EF?

Post by willthrill81 » Sun Nov 24, 2019 11:18 pm

tomwood wrote:
Sun Nov 24, 2019 2:58 pm
petulant wrote:
Sun Nov 24, 2019 2:45 pm
Most of the time, being a government employee means a lower need for EF due to greater stability compared to the private sector. I wouldn't extend an EF just because of shutdowns.
Would you suggest 1-3 months for EF?
I am a state employee working under a long-term contract and sleep very well at night with one month of expenses in cash, partly because we have about 4X our annual expenses in our portfolio that we could draw from if the need was significant.
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Re: As a govt employee, should I have a larger EF?

Post by mighty72 » Mon Nov 25, 2019 1:20 am

[moved to 'Personal Finance' sub-forum.]

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Re: As a govt employee, should I have a larger EF?

Post by Ybsybs » Mon Nov 25, 2019 8:59 am

I choose to have a 12 month emergency fund divided into certificates of deposit maturing monthly. I also budget monthly.

When a shutdown happens and paychecks aren't deposited on time, I cash out that month's CD when it comes due instead of renewing it for the next 12 months.

In my situation, a shutdown is personally more expensive because daycare is on the federal facility and needs to be paid for even though it isn't available. Childcare is still needed and the federal employee still needs to work. So we essentially have to pay for daycare twice for the duration of the shutdown.

I found from the previous 35 day shutdown in 2018-2019 that many people who were not federal employees had no empathy for the situation. They also were full of bad advice and strange assumptions: just go get a pay day loan, put all your expenses on credit cards, don't pay your bills just call all the utilities and everyone will understand.

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Re: As a govt employee, should I have a larger EF?

Post by dm200 » Mon Nov 25, 2019 9:19 am

Living in an area with a large number of federal employees - my opinion is that a "normal" emergency fund should be fine for federal employees. When these shutdowns happen, they are usually short. When they are longer, just about all banks, credit unions, etc. give a lot of slack to federal employees affected. Eventually, all federal employees have received all of their pay for the shutdown period.

If you are a federal contract employee - such folks usually do not get paid at all. The other groups hit hard by these shutdowns are businesses depending on federal employees and contractors (such as restaurants, bars, retail stores near federal sites, some taxi drivers, etc.). These folks lost income and will never get it back.

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Re: As a govt employee, should I have a larger EF?

Post by rich126 » Mon Nov 25, 2019 9:59 am

tomwood wrote:
Sun Nov 24, 2019 2:58 pm
petulant wrote:
Sun Nov 24, 2019 2:45 pm
Most of the time, being a government employee means a lower need for EF due to greater stability compared to the private sector. I wouldn't extend an EF just because of shutdowns.
Would you suggest 1-3 months for EF?
Everyone should work towards having money available to cover 3-6 months of not working. Whether it is CDs, treasuries, bond funds, or whatever as long as you are comfortable selling them at potential market lows.

I've been a government employee and gone through some of the shutdowns although nothing too serious because of where I worked. And back pay, while not guarantee, has always happened. What you don't want to be is over leverage and living from paycheck to paycheck. There was a woman getting a GS 13 pay, and her husband was an attorney but they lived paycheck to paycheck and had taken out a 2nd or a 3rd mortgage on a house they obviously shouldn't have bought. They had no clue how to manage money or a budget. Avoid doing that and you'll be ok.

You should be able to look at your cash flow and know what type of person you are and shouldn't need someone on line to tell you how much you need.

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Re: As a govt employee, should I have a larger EF?

Post by scubadiver » Mon Nov 25, 2019 10:46 am

tomwood wrote:
Sun Nov 24, 2019 2:35 pm
As federal shutdowns become more frequent in recent years....
I don't accept your premise. There were 13 full or partial government shutdowns between 1976 and 1987. There have been 7 since, though admittedly the last one was a doozy for those impacted.
tomwood wrote:
Sun Nov 24, 2019 2:35 pm
I ask for personal reasons as I’m a new government employee and not sure what might happen at the end of December and I want to be ready. I’ve never experienced a govt shut down or the like. Any advice to help me be ready would be a help.
I was a federal employee during the 2013 shutdown and was not furloughed. For most of my neighbors in northern VA who were, this was a really nice vacation. Like a lot of things these days, this ended up being a nothing burger and I don't recall us even missing a paycheck (theoretically, I was working without pay). I say that not to make light of the situation, but just to note that these tend not to be the financial emergencies that you read about in the press. The people who are severely impacted though tend to be younger individuals who are not well established financially and frankly those who are just bad at managing money.

In any event, the worst federal gov't shutdown in history (measured by duration) lasted five weeks. Individuals in the private sector have nothing even close to this level of financial security.

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Re: As a govt employee, should I have a larger EF?

Post by dm200 » Mon Nov 25, 2019 11:20 am

A local church received a generous donation from a parishioner at the last relatively long federal government shutdown, so that the church could provide financial assistance to federal employees who were really adversely affected by loss of income during the shutdown.

As it turned out, most of this generous donation was not used by the local church to provide such financial assistance - because very few such needs were identified.

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Re: As a govt employee, should I have a larger EF?

Post by dm200 » Mon Nov 25, 2019 11:23 am

scubadiver wrote:
Mon Nov 25, 2019 10:46 am
tomwood wrote:
Sun Nov 24, 2019 2:35 pm
As federal shutdowns become more frequent in recent years....
I don't accept your premise. There were 13 full or partial government shutdowns between 1976 and 1987. There have been 7 since, though admittedly the last one was a doozy for those impacted.
tomwood wrote:
Sun Nov 24, 2019 2:35 pm
I ask for personal reasons as I’m a new government employee and not sure what might happen at the end of December and I want to be ready. I’ve never experienced a govt shut down or the like. Any advice to help me be ready would be a help.
I was a federal employee during the 2013 shutdown and was not furloughed. For most of my neighbors in northern VA who were, this was a really nice vacation. Like a lot of things these days, this ended up being a nothing burger and I don't recall us even missing a paycheck (theoretically, I was working without pay). I say that not to make light of the situation, but just to note that these tend not to be the financial emergencies that you read about in the press. The people who are severely impacted though tend to be younger individuals who are not well established financially and frankly those who are just bad at managing money.
In any event, the worst federal gov't shutdown in history (measured by duration) lasted five weeks. Individuals in the private sector have nothing even close to this level of financial security.
Some "essential" federal employees were required to work their regular schedule and duties during the last shutdown, but receive no pay until after the shutdown was over. At the end, the folks who did not have to work received the same pay as those who actually were required to work.

I this increasingly crazy federal government situation, who knows what will happen in the coming year or so.

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Re: As a govt employee, should I have a larger EF?

Post by IMO » Mon Nov 25, 2019 5:28 pm

Jerry55 wrote:
Sun Nov 24, 2019 10:51 pm
I worked for the US Gov, and in particular, the FAA since 1978, and have been thru 13 shutdowns (1978 - 1996) and fortunately retired in 2012, thereby missing the worst in 2013 and 2018.

Even though some were short, they were disruptive at the very least. Essential employees like myself HAD to report to work, whereas I saw my supervisors laugh and stay home because they were considered "Non-Essential". This last one that lasted for almost 2 months were the most devastating in that paychecks were missed for almost 3-4 entire pay periods, and sick leave nor annual leave were approved. I worked for the FAA (Federal Aviation Administration) and with 4 years USAF, retired with 39 years total.

Approx. 25% of FEDS were furloughed in 2018, so the pain was within a small fraction of the workforce. It also depends on what facility does paychecks (ours was the Dept of the Interior), and I can tell you that FAA was paid over 2 months late. To make it worse, we worked 24/7/365, so our paychecks varied widely, sometimes by as much as 20% or more.
When pay finally came back online, everyone took a hit, because Sunday Pay (25%), Holiday pay (100%), Night differential (10%) were omitted and peoples checks were smaller than usual, and it took 2-3 months for them to be compensated (lots of holidays from Nov-Feb). THEN, it took another 30-60 days for total compensation for shift differential and holiday pay. The dysfunction from supervisors laughing that they got paid for going on vacation took it's toll on the workers for certain. Very demoralizing indeed.
Many of us older workers had our homes paid for, but I saw the pain in the newer workers (I'm still a Union member and speak to them a lot). I could afford to go unpaid for 6-12 months, but they were certainly on edge, and for a good reason.

All I can say it....It's better to have it and not need it, than to need it and not have it. Many had to take loans or borrow from their TSP to survive. At the very least, I'd suggest 6 months for a comfort zone.
Please don't wind up that way, be prepared for anything, coz you never know.
In a recent thread/post, I pointed out how any "non-essential" federal employee should take free vacation. At any federal organization, it is pretty apparent quickly who are the ones who are required to work with a delayed paycheck and who are the ones who get a free vacation. Someone responded like ALL employees are getting the short end of the stick (false).

And absolutely agree, very demoralizing to see people get a free vacation while one is having to work harder without the "non-essential" staff present. Whenever there is a shutdown, I feel sorry for the people forced to work (the essential ones) with delayed paychecks while they have co-workers sitting around at home eating bon bons also getting the same delayed paycheck. How demoralizing.

So OP, bottom line, yeah keep a decent emergency fund so you wont be some sap on the news complaining about their free vacation just because they didn't plan well enough to last a few months with DELAYED pay. This is MUCH different than someone who is loses their job and doesn't have pay or unemployment benefits to cover decreased pay.

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Re: As a govt employee, should I have a larger EF?

Post by petulant » Tue Nov 26, 2019 10:45 am

tomwood wrote:
Sun Nov 24, 2019 2:58 pm
petulant wrote:
Sun Nov 24, 2019 2:45 pm
Most of the time, being a government employee means a lower need for EF due to greater stability compared to the private sector. I wouldn't extend an EF just because of shutdowns.
Would you suggest 1-3 months for EF?
Just now coming back to this. You got a lot of good input in the rest of the thread. I actually don't plan my EF based on months of salary. I plan it based on potential eventualities, like living expenses for how many ever months I want to feel good, deductibles on house, health, and car insurance, needing to replace home HVAC without insurance, etc. If you're doing months of salary, 3-6 months if the normal advice for everybody I think, but I really believe it should be based on your particular risks, financial resources, and desire to have a cushion.

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Re: As a govt employee, should I have a larger EF?

Post by Gray » Wed Nov 27, 2019 9:59 pm

I’ve been through shutdowns from 1995 through 2019. I switched my direct deposit to run through Navy Federal to take advantage of their 2 paycheck 0% loan option that is automatically paid back when pay is restored.

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Re: As a govt employee, should I have a larger EF?

Post by dm200 » Sun Dec 01, 2019 3:22 pm

Gray wrote:
Wed Nov 27, 2019 9:59 pm
I’ve been through shutdowns from 1995 through 2019. I switched my direct deposit to run through Navy Federal to take advantage of their 2 paycheck 0% loan option that is automatically paid back when pay is restored.
Yes - a great many credit unions serving significant numbers of federal employees usually offer such low or very low rates on such loans - as well as often deferring due payments on many loans.

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