A government shutdown can have a devastating impact on your finances, especially if you are not prepared. That being said, there are ways to weather the storm, get past this difficult period and get back on your feet. One thing to keep in mind though, is that a government shutdown is not the only time your finances can be impacted.
You can feel some serious squeeze on your finances during a recession, a job loss or even as a result of a serious illness. These tips will help you recover from and stay prepared for whatever financial storm life might bring.
Recovering from a government shutdown, recession or job loss
1. Contact your creditors and service providers to request a grace period
Having to call creditors and service providers is no fun at all. However, it’s important that you communicate your current financial situation with them as soon as possible. Specifically with a government shutdown, many creditors and service providers are offering concessions and support to their customers. The big caveat here is that you have to reach out to them first to let them know. Not communicating your situation can make your current financial situation worse if you start getting charged late fees, additional interest, and other fees and penalties.
2. Dip into your savings
3. No savings? Leverage debt…strategically
If you have no savings or you have depleted your savings, taking on debt might be your only option. However, just because you are taking on debt to support yourself temporarily does not mean that your finances are a lost cause. One important thing to keep in mind is that you don’t want to take on more debt than you actually need. This means you’ll want to map out exactly how much you need to get by over the short-term, focusing strictly on your needs, not your wants or “nice to haves.” Knowing what this baseline amount is will help you minimize the amount of debt you take on.
Next, you’ll want to start documenting exactly what debt you are taking on, from whom and at what interest rate. Create a priority list and debt repayment plan of what to pay back first, structuring your plan in such a way that you pay back everything you borrow during this time as quickly as possible once your income starts to come in again. Here are some debt pay off tips when that time comes.
4. Look for part-time work or a new full-time job
Being in a difficult financial situation is not the time to sit around feeling sorry for yourself or complaining about things you can’t control. Start looking for alternative income sources in the form of a part-time job. Even if it means working at a job where you are over-qualified, some income is better than no income.
If you’ve been considering changing careers or switching jobs, now is a great time to update your resume and cover letter and start applying. Set a goal every day to research and apply to as many jobs as possible.
Tip: If you get a part-time job, it’s a good idea to keep it even after you go back to your full time job. The extra income can help speed up how soon you are able catch up if you’ve fallen behind financially.
5. Make some extra cash from the things you own
Got things in your home you don’t need? Consider selling those things to bring in some extra cash to help you pay your bills. For instance, gently used or new clothing, appliances, electronics, etc. Facebook Marketplace, eBay, Poshmark, your local consignment stores, and friends or family are great places to start. Be sure to price your items competitively so you can get them out the door and get cash in the door as quickly as possible.
How to ensure you are not impacted by a future government shutdown, recession or job loss
Once you get back on your feet, it’s important to establish a fall-back plan for yourself. This plan will buffer you in the event of a future government shutdown, a recession or life situation and minimize the negative impact on your finances. Here’s what to do:
1. Start building your emergency savings
2. Create additional streams of income
When you have multiple streams of income coming in, you are less devasted by the loss of one stream. Depending on the income stream you pursue, it can take some time and effort, to become viable, but it’s 100% worth it if you can make it work. Some ideas to create multiple income streams include some of the things already mentioned above like getting a part-time job and selling things you don’t use. Other streams could include starting a side-hustle, passive income from rental property, portfolio income and more. Here’s a full break down on different ideas to create multiple streams of income.
Situations like government shutdowns can be financially devastating but with a committed plan and strategy, you can get through it, recover and ensure you are well prepared if and when this occurs again in the future.