The government shutdown affected just about everyone in some way. And for many of us, it was scary. Would we get paid? Would veterans benefits continue?
The answers changed depending on the day of the week. Until laws were changed, no one would get paid. Congress eventually passed a law that ensured active duty military members would get paid, but many non-military government employees were furloughed without pay (many of them will get back pay, but that doesn’t account for the problems many people incurred while they were without pay).
There were other problems: many members of the Guard and Reserves had their drills canceled, reducing their points for the year, and leaving them without their expected pay. Numerous base activities and benefits were temporarily canceled or shut down. The Commissary, base exchange, child care, and other base benefits were unavailable.
In short, it was a bad dream for most military members and government employees. And here is the worst part: it can, and likely will, happen again.
Like the last few times dealing with the debt ceiling, the government placed a band aid on the wound. They didn’t make a permanent fix. This has been going on for the last two years, and it is likely to continue unless the government passes a permanent solution. In the mean time, it is up to all of us to do as much as we can to take control of our lives. Here are some tips we can all use to get on a better financial footing so the next time something like this happens it will still be an inconvenience, but hopefully, it won’t be catastrophic.
We Need to Take Control of Our Finances
It is hard to be in control when you are in the military. You go where they tell you to go, you get paid when the government says you get paid, etc. I get that. But there are things we can all do to help ourselves be in more control of our financial lives.
It starts with our day-to-day and week-to-week living. Living paycheck to paycheck is tough, and for many, it is a reality. But we all need to try to get ahead of the paycheck game. (Yes, I know it is hard to live on an enlisted salary, but tens of thousands of military families do it every day).
Getting our of the paycheck-to-paycheck cycle: There are no secrets here. The only way to get out of the paycheck-to-paycheck cycle is to spend less than you earn (or earn more than you spend). It won’t happen any other way. Here are some recommended tips to get you started:
- Build an emergency fund. An emergency fund is nothing more than a savings account you set up for a rainy day. You don’t touch it unless you absolutely need to. There is no magic number for how much money you need in your emergency fund, but a recommended starting point is $1,000 (you don’t have to stop there, just set that as a target to get started). That is a lot of money, but you don’t have to put it all in right away. Start saving $25 a week, or $50 a paycheck, or whatever you can afford to put away. The money in your emergency fund will help you deal with any unexpected expenses that pop up, such as a flight home, a car accident, or a government shutdown. Your emergency fund will help you avoid relying upon credit cards or other loans in an emergency.
- Reduce your debt. Debt is nothing but an anchor to your financial growth. It is hard to cut back your spending when you have a large portion of your income tied up in payments every month. Every bit of debt you reduce now is less money you have to spend before it hits your bank account, making it easier to weather the storm of a government shutdown or other event that limits your cash flow.
- Increase income. Increasing your income is a great way to supercharge your savings or reduce the time it takes you to get out of debt. Not everyone can work a part-time job when in the military (and most military members shouldn’t). But there are other ways to earn more money, including having a side business, or a hobby that can generate income. Spouses may also be able to work part-time, either in or out of the home. Any additional income can make cash flow problems easier to deal with.
The government shutdown was not a static event. There was news about it in the weeks leading up to it, and a constant news stream during the shutdown. There was no permanent solution, so it is very possible this can happen again. Be ready if it does. If you see anything about this in the news, start preparing as soon as you can. Cut expenses where possible, save what you can, encourage your spouse to look for part-time work if possible, etc. Look at your personal situation and adjust as necessary. Preparing even a month out can reduce your stress levels.
Bank with Someone Who Understands
I recommend banking with a military financial institution such as Navy Federal Credit Union, Pentagon Federal Credit Union, or United Services Automobile Association (USAA). (There are likely other good financial institutions out there, I am recommending the ones I am most familiar with). All of these financial institutions are built to serve their members first, not shareholders like corporate banks. (Credit Unions by definition are owned by their members, and USAA is under a unique charter; they too are owned by their members). Because of these differences, these financial institutions are able to do things for their members that other financial institutions won’t do, such as offer interest free loans during a government shutdown or other forms of assistance to help members get through a difficult period. They may also offer member benefits during a PCS or deployment, better customer service than most large commercial banks, better financial products, fewer fees, and more. I recommend looking into joining one of these institutions if you aren’t already a member.
Take Control Where Possible
At the end of the day, the government shutdown was a major inconvenience for many people. And that is unfortunate, because the shutdown harmed the people the government is supposed to protect. That makes for an eye-opening experience for many of us. For me, it reinforced that I need to take as much control into my hands as possible.