Paycheck Chronicles

Disaster Delayed: Now What?


Remember this time last month, when the government shutdown was in effect and we were all wondering if we would get paid on 1 November 2013?  Thankfully, Congress and the President came to an agreement to reopen the federal government and lift the debt ceiling. That's great news, but it doesn't mean that all is well. The agreement only funds the government until 15 January 2014, and suspends the debt ceiling cap until 7 February 2014.  Given the political turmoil of the last few years, it is likely that we'll be in a similar situation of uncertainty when these deadlines expire.   We would all be smart to make some changes now to make sure that things aren't so stressful in the new year.

Save Some Money

Yes, I know it is hard.  Many military members live paycheck-to-paycheck, and our family has been there.  But what is going to be harder:  finding a way to build a little savings now, or being seriously without any money if the government fails to figure out how to pay you?  Start small, even $25 a paycheck will add up eventually.  Adopt a "do whatever it takes" mindset.  Cut coupons, eat beans and rice, babysit for your neighbors, give up your home internet, whatever.  There is always somewhere to find a little extra money.  If you are stuck for ideas, check out the financial counseling available on base.  A little outside perspective might be just the thing to help your budget.

Reduce Your Expenses

Spend a little time thinking about where your money goes, and figuring out how you can cut back on your obligated spending.  Obligated spending means any bill that is due regularly:  rent, insurance, car payment, cell phone contract, credit card bills, etc.  Look for ways to reduce your monthly obligations.   You can search the internet for lists of ways to cut back.  Here are the first five places I'd look:
  1. Telephone, internet and cable television bills:  See what you can give up, or at least call and try to renegotiate your package.  If the first representative can't help you, call back.
  2. Cell phone contract:  Most companies will allow you to move contracts within their options.  Ask for help evaluating your usage, and see if a less expensive plan would meet your needs.  Don't go too crazy, though; overage fees will kill your savings pretty quickly if you choose a plan that is too low for your usage.
  3. Food!  While not technically a fixed expense,  it is usually the second or third largest item in a person's budget.  Think about ways to lower your food costs without sacrificing quality.  In our family, the budget breaker is snacks:  snacks from the convenience store, snacks from the grocery store, snacks of all sorts.  Think about your food spending and figure out what category could use an easy trim.
  4. Expenses that go with socializing:  No one wants to sit home alone every day.  But going out to lunch, even occasionally, is expensive.  And happy hour, or movies, or attending events - all big cash.  Figure out free ways to hang out with friends.  Go for a walk, host a movie night, check out free days at museums.  There are tons of ways to have a great time without spending much money.
  5. Comb your bank accounts and credit card bills for automatic debits.  It is so easy to sign up for magazine subscriptions, gym memberships, and wine clubs and then forget that you're paying that money every month.  If you're not using it, cut it!

Reduce Your Debt Payments

Yes, I know, this is easier said than done.  But debt payments can wreck the overall financial situation of even high earners.  There are lots of methods for paying down debt:  tackling the smallest debt first, or paying off the highest interest rate first, or even just picking the one that bothers you the most.  It doesn't matter which method you use, as long as you do it.  I like the idea of picking the debt that is easiest to eradicate because that eliminates that minimum monthly payment and gives you more flexibility.  My friend Jackie's Pay Off Debt App can help you see your debts and calculate the ways to pay them off.

Find Some Other Income

Think of ways to diversify your income.  Getting a second job can be difficult if you're on active duty; some jobs actually prohibit service members from having other jobs.  If a part-time job isn't an option for you, consider other ways to bring in some side cash.  Sell stuff on Ebay, pick up a few gigs on Elance, offer your services on Fiverr, mow lawns, babysit - surely you are qualified to do something.  If you are married, consider whether your spouse can get a job, or get a second job.  Would starting a small business work for you?  I loved our carpet cleaner in Hawaii - he was an active duty guy building a career for after he retired.  He worked when it fit in his duty schedule, his prices were good, and he didn't have any trouble getting on base to do our carpets.  He said he loved having the flexibility of running his own business.

While we all hope that our federal government can keep things running smoothly, history tells us to be prepared for anything.  That anything includes the possibility of delayed pay.  Making small changes today will put you in a good position for the future.

Check out my friend Ryan Guina's article:  Lessons Learned From The Government Shutdown, for another viewpoint on this topic.

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