Thursday, October 10, 2013

Money Fears: Living Paycheck to Paycheck & the Government Shutdown


At some point in our lives most of us have lived in the fear of living paycheck to paycheck. We all know the risks, yet the majority of Americans live with less than one month of reserves set aside. For many, their "reserve" is their credit cards, for others it’s tapping into their home equity, and for others it's mom and dad (yes, even at 30-something, 40-something and 50-something.)

For many, though, there is no room on the credit cards, no home equity and no one to turn to. They are just one major car repair, health problem or job loss away from not being able to pay their mortgage or rent. This is the stuff that ulcers, sleeplessness and crippling anxiety are made of. Stories of people slipping into homelessness frequently begin with just one unexpected major event that triggered the collapse of what was a shaky financial foundation.

If you’re a federal government employee, though, you probably sleep a little better than most. You probably feel fairly secure that you have a good job, that your employer won’t fold, that your income is secure. Until now that is. The government shutdown is creating massive ripples throughout America. If it doesn't pull on your heart strings quite so much when you envision a $90,000/year employee missing one paycheck, think about the minimum wage maids and maintenance workers stuck in the Grand Canyon. How long can they go without their paychecks and still be able to put food on their family’s table? Where can they turn to for help? Not their neighbors, because they don't have a paycheck either. And while yes, the $90,000/year employee SHOULD have reserves set aside, the truth is that many don't. We've all been there, done that, and there are thousands of them that right now, today, are scared.

How do you ensure that you never have to live in the fear that thousands upon thousands affected by the government shutdown are living in this month? Go open up a new savings account, label it "Emergency Reserves" and move some money in there. If you think you can't, put $5 in there. Just take action. Every month, keep moving money in. If you can’t, still put $5 in there. Don't touch it, no matter what.

I know this sounds so much easier than it is for many people. I know, because I've been there. When I was walking through a particularly challenging financial time in my life, I had a wise money mentor. Every time something would go wrong, I'd call him for advice on how to fix the problem. He refused to talk to me about how to "fix" the problem. Instead, he'd trace back to the core of the problem and advise me to start there. In the beginning, it just annoyed me. "I think I know that if I had six months of reserves in the bank I wouldn't be struggling with this major car repair, but that doesn't help me right now!" He held firm. He'd just tell me "go put some money in reserves."

Annoying.

As time went on, though, and I lived with the annoyance and followed his advice, I could see how focusing on the core of the issue rather than the symptom started to have a great impact. Over time, I became better able to weather financial storms. Over time, the financial storms started to feel like financial flurries, and then just financial breezes.

My hope for all federal employees, contractors and others affected who are living in fear right now, uncertain of how they are going to weather the shutdown, is that they take this time to trace back to how they could ensure that the next time this happens, they'll have less fear. They'll be more prepared. They'll know that they took some action, no matter how small.


-Stacey Powell

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