A Financial Re-Think.

by jolyn on April 13, 2011

in Planning

Well, that was fun, wasn’t it? (See previous.)

Now that we have that crisis diverted, can I see a show of hands for those who may be conducting their financial lives differently in the future? No more can we claim our income is guaranteed just because we work for the government. Oh, we would have gotten paid eventually once Congress reached an agreement… But what about in the meantime? And what about the “non-essential” civilian government employees who were told not to bother coming to work until the politicians signed an agreement, because their pay wouldn’t be made up anyway?

From what I gathered listening in on cyber conversations, a lot of people were not prepared for the eventuality of not getting a paycheck, even for a day, let alone a week. Or more…

Some of them couldn’t help it. One military spouse in particular comes to mind: her family had just experienced a year of unemployment and her husband had recently joined the military. He was getting ready to deploy and leave her and the kids on the homefront. They’d depleted their savings during his unemployment and hadn’t had a chance to shore them back up, and she was scared. Can you blame her?

I’m not talking about people like that.

But what about the rest of us? Lest you think I’m picking on you, I can think back to just a year ago when my husband and I were not exactly prepared in the event his employer decided not to pay him on time, no sirree. We were going hog-wild and paying off debt Dave-Ramsey style: that is, keeping only $1k in liquid savings and putting every extra penny toward our snowball. Had we lacked a paycheck, even for a week, we had virtually nothing to draw on besides that measly $1000. Which doesn’t go far when you have a mortgage to pay and lights to keep on and food to put on the table…

We would have been forced to reach for the credit card. Or to not pay our bills on time. I know some of you were facing that choice this time around. Which would you have chosen? Did you even have a credit card as a choice? Hard-core Dave Ramsey fans would have already cut up their credit cards…

I think we have a responsibility to ourselves, and to society at large, to be as prepared as possible to help ourselves in the even of a financial crisis — even when it’s not of our own doing. Or maybe especially when it’s not of our own doing. It’s all good and well to whine and cry about how unfair it is and how Congress is still getting paid and How Dare They? and point the finger and blame everyone else. But that’s not going to put food on your table or keep a roof over your head. And it’s certainly not going to help your neighbor who may be worse off than you. And there will always be that neighbor. Don’t we want to help them out, too?

I think of the young family, new to the military, fresh off of a year of unemployment. It’s difficult enough to face your first (or second, or third…) deployment, let alone wonder if your husband’s going to be paid while he’s gone. In times of old, that young woman might have known that her neighbors would come to her aid. That food would find its way to her table. That her rent would get paid. That she would get by, with a little help from her friends.

I feel like we’ve lost that faith, and that feeling of responsibility: that when times get bad, neighbor will help neighbor. Part of it is that we don’t know who needs help: they don’t exactly go around with a sign around their neck. Part of it seems to be a lack of trust: what did they do to get themselves in such a bind in the first place? But much of it seems to be our inability to help anyone else because we’re just treading water ourselves.

I think this budget crisis woke a lot of people up. At least I hope it has. The crisis was averted a whole five days ago. Have you already forgotten?

I’ve been thinking about how we in the Budgets household might do things differently, both short-term and long-term. I’m thinking a little differently about our financial planning, and about what purchases we were thinking about that we might hold off for now. For example:

Short-term:

  • I did not re-enroll my youngest in Karate for the two months we have left in Ohio. That’s about $200.
  • I had told John that I wanted to get a new washer and dryer when we get to California in June, finally. We’ve always made do with used ones. I’m re-thinking that now.
  • John wants to get a motorcycle and has been shopping around. That purchase is on hold.

Long(er) term:

  • Continue to snowball debt. The crisis renewed my motivation to do this as fast as possible. See above.
  • Double our liquid savings. The original amount was arbitrary to begin with, and partly determined with the mindset that John’s military employment and income was secure. In light of the budget crisis, and of our becoming reluctant landlords for the second time around, we need to rethink our savings buffer. In my mind right now, doubling it is just until we pay off more debt. After that we should add to it even more…
  • Figure out how we should best balance bulking up savings with paying off debt.
  • Add income: Several months ago, I sort of stumbled into a way to earn a little income through a home-based business. I’m more motivated to continue doing the work necessary to maintain this business and allow it to grow, albeit slowly.

What about you? Are you making financial decisions differently? Holding off on purchases? Halting retirement contributions to pay down debt? to bulk up liquid savings? Are you making any radical changes in lifestyle to lower your cost of living? Looking for a new (non-government) job?

Please, do share.

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