This is a guest post by Janet Pearson of Military-Money-Matters.com. Janet is a former Navy JAG officer and military spouse. She is now the spouse of a retired fighter pilot, and the editor and publisher of Military-Money-Matters.com, where she continues her passion for helping military families improve their quality of life and create a secure financial future. I asked Janet to write this piece because she is smart about money and she has experienced delayed military pay due to government budget issues. Janet has written more extensively on this topic at her website, Military-Money-Matters.com. I encourage you to read it, and see all the other wonderful resources Janet has provided throughout the site.
What should you do if there’s a government shutdown?
As Kate noted in her recent column, some of the best advice for military families, in every situation, is “Prepare for the Worst and Hope for the Best.” That’s actually good advice for everyone, but is even more important when so much of your life is controlled by someone else.
If a much-bally-hooed and much-dreaded government shutdown occurs due to budget bickering in the halls of Congress, what does it mean to you?
First, you need to understand what would actually happen in the event of a “government shutdown.” Then, it might help you to understand that thousands of military families before you have survived one or more. It is not the end of the world. Congress is not deliberately trying to ruin your life, although it may feel like it at the moment.
It’s just that the most recent government shut down occurred in 1995-96, during the Clinton administration, and most of you weren’t on active duty then, so it’s something unheard of to most of today’s military families. The lack of specific information about how your pay may be affected is causing varying levels of panic for some military families.
Andrew Taylor of the Associated Press reported: “. . . from a practical perspective, shutdowns usually aren't that big a deal. They happened every year when Jimmy Carter was president, averaging 11 days each. During President Reagan's two terms, there were six shutdowns, typically of just one or two days apiece. Deals got cut. Everybody moved on.”
I lived through several “government shutdowns” as an active-duty military spouse. One of them, during the Carter administration (1979-80 time frame I believe), resulted in delayed military paychecks. I can tell you it is survivable, and probably with very little damage if you react in a level-headed and responsible manner.
You see, a “government shutdown” doesn’t really mean a TOTAL shutdown of the government. Only non-essential functions are shut down. Certain essential functions must continue, regardless. The military is one of them, along with other agencies like the FBI and Social Security.
So all military personnel will continue to report for duty as usual. As far as you’re concerned, the major way you would be affected is that your paycheck may be delayed slightly, but it will come eventually.
Some civilian government employees, which may include some military spouses, may face temporary furloughs, and there is a question whether they will receive pay for any furloughed time. They have in the past, but there is no guarantee they will be paid this time.
That does not apply to military personnel. Military members will be paid, although pay may be delayed for a few days to a few weeks. It is very unlikely that Congress would allow the situation to drag on longer than that without doing something.
Fear of the unknown is one of the greatest fears there is for us humans. It could be that one of the reasons no one wants to disseminate information about what you can expect from the current administration in the event of a shutdown is that the more pressure you feel, the more pressure you can bring to bear on your Senators and Congressional representatives to solve their budget impasse.
Once again, politicians are allowing our military members and their families to be pawns in their partisan games. It’s unconscionable, but it’s the unfortunate reality. (This is just one of the many reasons we need more members of Congress who have military backgrounds, who understand what it is that you’re being asked to do, and are doing with honor, each and every day.)
So, to help lessen your fears about what may happen, here are a few recommended do’s and don’ts, in the event our elected representatives can’t get their act together in time to forestall a government shut down next week.
DON’T PANIC. You will survive. And if you keep your head about you, your family will survive in better shape.
DON’T rush out to get a payday loan if your paycheck is going to be delayed. That would be probably the most detrimental reaction for yourself or your family. The situation is not dire enough to justify such a reaction.
DON’T make any sort of knee-jerk overreaction. Take a wait-and-see attitude, but have a contingency plan. There’s a good chance Congress will solve the problem. They usually do.
DON’T worry that you will be evicted or your car will be repossessed or your credit will be ruined if your payments are late one time. They won’t. Late payments aren’t even reported till they’re more than 30 days late. And evictions and repossessions don’t happen until you’ve missed several payments (usually 3 or more).
DO stay calm about it. Talk with your spouse and come up with a plan for your family to weather this crisis, if it occurs. Look carefully at expenses, and see where you can slash expenses till your paycheck catches up. Be ruthless. If it’s not essential to survival – milk for the baby, not sugary snacks for the kids – it has to wait. No new clothes, no movies, no eating out, no non-essentials until you get paid. Less beer and fewer cigarettes would be good for you, too.
DO be prepared to talk with your regular creditors and explain that your family depends on your government paycheck, and until it arrives, you will have no way to pay them. Promise them that as soon as you receive your paycheck, you will pay them. Then DO IT!
When we experienced a delay in receiving our military paycheck, I wrote letters (better than a phone call, and creates a permanent record for you and them) to the landlord and to all our “regular” bills, utilities, telephone, etc. I explained that my husband was on active duty, and that due to circumstances outside our control, our pay was being delayed until Congress reached agreement. I continued that I was very sorry, but until we received our pay, we would be unable to pay our bills. Then I thanked them for their understanding and their support.
I don’t remember having a single problem as a result (other than some stress over it). The budget tug-of-war was prominent in the news, and they knew I was telling the truth. It helped that we had a history of making our payments on time. It was a long time ago, but I think only one paycheck was delayed, and everything was fixed before the second paycheck came due.
Today’s military families also have an advantage that we didn’t. At that time, everyone was paid with physical checks, so someone had to actually “cut” and print and distribute pieces of paper. Today, your pay is electronically deposited to your bank account, so it’s all automated and can happen with involvement of fewer actual people. Given those circumstances, there’s a chance that even in the event of a government shutdown, your pay may not be affected at all.
I have seen reports that Social Security payments, which are on a similar automated deposit system, would go out as usual even if there’s a government shutdown, so that lends some credence to the idea that military paychecks may not be affected.
If your pay is delayed, and you have automatic debits in place, you may need to notify those creditors NOT to take the automatic debit until you notify them that it’s OK, because otherwise they will bounce. In the event that something does bounce, talk to your bank and ask them to waive any overdraft fees because the overdraft was due to circumstances beyond your control. Also ask any creditors to waive late payment fees if they’re assessed, because the late payment was outside your control. They should be willing to do that, especially if you usually make your payments on time.
This is one time when it’s definitely to your advantage to do your banking with someone who understands the military lifestyle, like USAA.
Once this crisis (if it turns out to be one) is over, use it as an opportunity to sit down with your spouse and have a serious conversation about your family finances. Let this be the first step towards creating a family budget that will allow you to set aside some savings so you won’t be in such a panic should some other unforeseen circumstance arise in the future. You don’t want your family to constantly be one paycheck away from a total disaster.
Creating a budget and setting aside some savings will pay big dividends for your family, not just in terms of financial preparedness for the future, but also in terms of peace of mind. And as the commercials say, that’s “priceless.”
Thank you, Janet, for your unique perspective and sound advice.