How to Survive a Government Shutdown

A government shutdown is when the government stops providing services except those deemed "essential". Government shutdowns do not exist in other countries. Services that continue despite a shutdown include the National Weather Service, medical services at federal facilities, the postal service, armed forces, air traffic control and management, and corrections. Personnel that continue to get paid during a government shutdown: the President, Congress, the military, federal law enforcement agents, doctors and nurses working in federal hospitals.

The DC Government, National Archives, The Kennedy Center, Food Safety and Inspection Service, Patent and Trademark Office, Social Security benefits, unemployment benefits, SNAP (food stamps), IRS refund delays, border patrol, some high ranking presidential appointees, approximately a dozen presidential personal aides would still function.

Americans have to change the way they think about money and how they spend it.  They must change their bad spending habits to ensure they have a decent life in case an unexpected expense occurs such as a medical condition, job layoff, and death of a loved one or economic crisis.  Here are 11 practical ways to shield yourself from a personal or economic crisis.

Essentials

Always have enough food for at least one week.

Bills

Pay priority bills first such as mortgage/rent, utilities, cell phone, auto and health insurance.

Emergency Fund

Create an emergency savings account to pay your bills and monthly expenses for at least 6 - 12 months.

 

Voluntary Simplicity Movement

The movement means spending in terms of needs vs. wants, cutting back in various areas of your life – reducing expenses, and being responsible with your spending.   

Get current on past due accounts

Pay down credit card and loan balances. Keep credit card balances at 20% or less of the credit limit which helps increase your credit score.  Pay credit card balances in full each month.

Create a budget

Create a budget to determine how much you earn, how much you owe and how much you are spending.   Include savings in your budget.  Track your spending daily, weekly or monthly.

Reduce expenses

Determine areas where you can reduce spending by buying more needs vs. wants such as bringing your lunch to work, shopping at discount stores or buying generic brands or downsizing to a smaller car or home.

Don't hide from bills

Call your creditors right away to setup payment plans to get current on old bills to prevent harassing calls or letters from creditors, damage to your credit report or legal action.

Get Protection

If you don't have health, life or disability insurance consider getting at least basic health and life insurance.  Bundle services with the same company to save money.

Extra Income

Find ways to earn extra income.

Plan for the unexpected

Plan for the unexpected. Reduce spending by 30-50% and have a plan A and B.  Think of possible scenarios. Develop an action plan for each and how you can adjust your spending to accommodate for those events.

Shop differently

Buy a used car instead of a new car. Buy everything generic: household items, clothing, prescriptions, toiletries, dry goods, canned goods, paper products. Buy non-designer clothes.  Avoid impulse shopping. Buy basic necessities and limit the amount of wants purchased.

How to Prepare for a Government Shutdown

The country is once again facing an economic crisis, a looming government shutdown that could happen on October 1, 2015. Why can’t Congress approve the yearly spending bill prior to the Congressional summer recess to prevent last-minute efforts to approve a spending bill?

The Senate is expected to vote on a spending bill by September 29^th. If the bill is approved it will be sent to the House of Representatives for their vote. This is a stop-gap spending measure that is aimed at buying time for Congress to reach a longer-term budget agreement that would fund spending through September 2016. A shutdown would affect federal employees, government consultants and contractors, nonprofits and other companies that receive federal funding as well as social services. They have to wait and see what happens on October 1^st.  Unfortunately, the government does not properly communicate to federal employees or provide support when furloughs or government shutdowns occur or become a possibility.

The country’s financial crisis could be blamed on several people. However, as individuals we must take accountability for our actions. We spend the most money per person/family than all the others countries in the world.  We have become so obsessed with things and using credit that we have become addicted to shopping. 

It is disappointing that a catastrophic event or looming government shutdown has to occur to bring the country back to reality. No matter your income you must change your lifestyle and spending habits. You must make a permanent change when you are facing a financial crisis and to prevent a future crisis.  Here are 6 ways to ensure you are prepared for a government shutdown.

Live below your means

This means if you do not have the money to buy something you do not buy it. It also means, even if you do have the money to buy something do you really need to buy or do you just want it because you can buy it.  What will be the value of the item after you buy it, will it increase or decrease in value, can you sell it to make a profit, will buying this item enrich your life and just add to the collection of things you already own. 

Track Spending

A budget is a spending plan that shows how you spend your money. A spending plan identifies what you spend, what you earn and what you owe.  Once you know where you money is going, it is much easier to track your spending and see if there are any areas where you can cut back.  Subtract your total monthly income from your total monthly expenses and if you have a negative value or less than 10% of your income, you need to change your spending habits quickly.

Downsize

If you live in a home that has extra rooms – rooms that are never used, lots of extra space and spend a lot of money in utility bills, or if you own a luxury car or mid-sized car that costs more than $20,000 you need to downsize. Trade in your car for a cheaper car with a smaller car note or buy a used car.  Rent out a room in your home to get extra money to pay down debt or pay for necessary expenses. 

Reduce spending

Reduce spending by 30%. Reduce expenses by buying in bulk, using coupons, buying only items that you need, or shopping at discount stores like Costco, Target, Wal-Mart or Walgreens. If you drink Starbucks coffee 5 days a week reduce it to 2 or 3 days a week. If you go to the barber or hair salon every week, start going every 2 weeks.  All of these little things add up and will make a difference in your spending plan.

Live for Tomorrow

Stop YOLO, FOLO, living for today, living day by day, paycheck by paycheck and plan for your future. If you don’t already have a retirement account get one. If you don’t have life insurance buy a policy as soon as possible. If you don’t have a savings account open one now. Contact a financial advisor create a financial plan and future goals. Living below your means and planning for your future make it easier to live for tomorrow. Ask yourself what do you want to be doing in the next 5 to 10 years, and then develop a plan to ensure you can achieve these things.

Communication

Take a few days to examine your emotions and acknowledge your situation. Review your situation and identify lessons learned to help you in the future. Do not make comments or go on emotional rants on social media or via email about your job, colleagues, supervisor or other employees. Avoid discussing your thoughts or feelings about the situation on social media. Social media is a permanent record of whatever you post even if you delete it so use your words carefully.  

Requests

Request a letter from your Human Resources department stating that you are without income due to a government shutdown. You may need this if the shutdown will cause you to pay your bills after the due date. If you are owed money from a company ask for the refund or credit. If someone owes you money ask for it now.

Recovering from the Government Shutdown

The country’s financial crisis could be blamed on several people but let’s not dwell on that.  As individuals we must take accountability for our actions. We spend the most money per person/family than all the others countries in the world.  We have become so obsessed with things and using credit that we have become addicted to shopping. 

What happened to the days when you only purchased items that you could afford?  These are the things are parents and grand-parents are familiar with. If you wanted to buy a home you had to save your money for a down payment and have a really good credit score otherwise you would be quickly escorted out the doors of the bank for wasting their time.  

It is disappointing that a catastrophic event like the recession and most recently the government shutdown had to occur to bring the country back to reality.  Unfortunately, some Americans are still in denial about their financial situation and are holding on for dear life to their “things”.  These “things” have no real value and losing “things” should not make you feel sad, depressed or angry. Losing “things” should teach you a valuable lesson – things have no value.  

There is a national movement called Voluntary Simplicity. The movement follows a basic principle - the only new things you buy are things you need, i.e. food, clothing (not designer clothing or designer shoes), and shelter (only enough for you or your family).  All other things are seen as luxuries which have to be stored, cared for, and maintained.  If you no longer had these things, how much more money would you have, how much more time would you have to spend with your family, enjoy your favorite hobby or give back to your community.  If you no longer had these things, how much more would you reduce your carbon footprint?  How different would your life be if the only new things you buy are things you need?

No matter what method you choose to change your lifestyle and spending habits you must make a permanent change when you are facing a financial crisis and to prevent future crises.  Here are 5 ways to ensure you can survive a financial crisis.

Live below your means. 

This means if you don’t have the money to buy something you don’t buy it. It also means, even if you do have the money to buy something do you really need to buy or do you just want it because you can buy it.  What will be the value of the item after you buy it, will it increase or decrease in value, can you sell it to make a profit, will buying this item enrich your life and just add to the collection of things you already own. 

Create a budget.  

A budget is a spending plan that shows how you spend your money. A spending plan identifies what you spend, what you earn and what you owe.  Once you know where you money is going, it is much easier to track your spending and see if there are any areas where you can cut back.  Subtract your total monthly income from your total monthly expenses and if you have a negative value or less than 5% of your income you are in serious financial trouble and need to change your spending habits quickly.

Downsize.

If you live in a home that has extra rooms – rooms that are never used, lots of extra space and spend a lot of money in utility bills, or if you own a luxury car or mid-sized car that costs more than $20,000 you need to downsize.  Trade in your car for a cheaper car with a smaller car note or buy a used car.  Rent out a room in your home to get extra money to pay down debt or pay for necessary expenses. 

Reduce spending.

Reduce expenses by buying in bulk, using coupons, buying only items that you need, or shopping at discount stores like Costco, Target, Wal-Mart or Walgreens. If you drink Starbucks coffee 5 days a week reduce it to 2 or 3 days a week. If you go to the barber or hair salon every week, start going every 2 weeks.  All of these little things add up and will make a difference in your spending plan.

Live for Tomorrow. 

Stop living day by day, paycheck by paycheck and plan for your future. If you don’t already have a retirement account get one. If you don’t have life insurance buy one as soon as possible.  Contact a financial advisor to make sure you finances are in order and protected.  Living below your means and planning for your future make it easier to live for tomorrow.  Ask yourself what do you want to be doing in the next 5 to 10 years, and then develop a plan to ensure you can achieve these things.