An email came out to my agency today.
The government employees at my agency got the same notification....
As far as people referring to the Sequester as a budget cut, keep in mind that this is actually a reduction in the cost of increase. Meaning that even with these budget cuts the federal government will still spend more in the current year (FY13) than last year (FY12) and more in FY14 than in FY13. Also, when calculating how much less those affected by the Sequester will be taking home (since this topic is about budgeting) we must also factor in the 2% rollback of the Bush Era Tax Cuts that took affect at the beginning of the year. At the end of the year affected employees will see a 14% reduction in their gross salary.
I've seen the following argument repeatedly that in many cases the reduction in pay may benefit the worker by knocking them into the next lower tax bracket.
Assuming an employee is a one income household, married filing joint with no pre-tax deductions who grossed $100K and took home $75K (25% tax bracket) in 2012 then the same employee with no pay raise will gross $86K (Still 25% tax bracket) in 2013 and take home $64.5K.
Now assume that the same worker who took home $75K in 2012 with no pre-tax deductions decided to participate in pre-tax 401k ($6K), Dependent Childcare FSA ($5K) and Healthcare FSA ($2.5K) for a total of $17.5K in pre-tax savings then this would lower his/her taxable salary (after the 12% Sequester) to $72.5K and put him/her into the 15% federal tax income bracket for a take home pay of $61,625.00, which is still $2,875.00 less than last year on paper, but you actually get $7,500 of that back (FSA's) and have $6,000.00 + employer matching contributions in a retirement account.
Now to stay on topic of how my household is planning to deal with the Sequester. I have started taking breakfasts and lunches to work instead of going out with coworkers. No more stops at Starbucks for coffee in the morning. I'm now surviving on home brew. I also stopped taking the Greenway and Dulles Toll Roads and have found alternative routes on non-toll roads. So far we haven't had to cut back on cable, internet or cell phones, but those are coming if need be. We have also suspended going out to eat breakfasts on the weekend and the occasional dinners out during the week. These lifestyle changes have reduced our monthly budget considerably, but taking into account the rollback of the Bush Tax Cuts, the higher costs of insurance premiums, higher co-pays and reduction in coverage (Thanks Obamacare) along with the higher costs of fuel and groceries we really don't see much savings at the end of the month.