This week the news cycle in the U.S. has been dominated by the shutdown of the federal government operations.
The funding authorization for those operations expired on Sep 30 without agreement between Congress and the President on how to move forward in the new fiscal year.
The result has been that non-essential operations of the government have been suspended while critical operations are still functioning. But the 800,000 federal government employees that are deemed non-essential, have been furloughed and sent home without pay.
If you look at recent financial statistics, about 75% of households live paycheck to paycheck. This means that they could not survive an extended period of time without income and would have to rely on debt to cover living expenses or emergencies.
A government shutdown is just one example of a loss of income. You could also experience an illness or family situation that prevents you from working for a long time. What would you do?
Here are 5 Ways to Prevent a Shutdown of Your Finances:
- Live on a budget so you can maximize your income and gain control of your spending.
- Prioritize spending to focus on the 4 walls: food, shelter, transportation, and clothing.
- Get out of consumer debt. In the event you lose your income, the last thing you want to worry about are credit cards or car loans. If you have those items covered, other non-essential things can wait.
- Build an emergency fund to cover 6 months of expenses. Give yourself a cushion to absorb the loss of income.
- Ensure that you have long term disability insurance. This is the type of insurance that would replace your income if you were to be disabled from working for an extended period of time.
Question: How would you handle the loss of income for an extended period of time?