Broker Check


| January 16, 2019
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$0.00 - How Long Would You Last?

Personal Finance Gut Check: How many $0.00 paychecks (or no check at all) could you receive before it would begin to hurt? This is a reality for many workers right now with the longest government shutdown on record occurring. So, ask yourself, what would it be like to not receive a check for 2 weeks? 1 month? 6 weeks? 2 months? and so on. When would you feel the pinch? Count your blessings if you have good savings - and if you don’t, please consider this a wakeup call to seek to raise your savings rate. $0.00 could happen to anyone.

My kids (like many others) are famous for saying “there’s nothing to eat” when the cabinets are bursting with food because it would require cooking something. Teenage problems. But what if there really wasn’t much - after eating all the macaroni and cheese or ramen noodles, what then? Thank goodness for food pantries and all those who work and volunteer for them - they sustain our communities and help those who need them. And, thankfully, the government is going to fund SNAP programs for February early so that people who need assistance will not go hungry. Food is one of the three essentials - food, clothing, and shelter - and there were a lot of concerns in this area. We are seeing restaurants offering complimentary meals to federal workers on furlough or not being paid. People can often make do with the clothes they have (unless they need a warm coat for the winter or something like that) but shelter is also an issue - how do they make rent?

A coworker of mine has a cousin whose husband is in the Coast Guard and has been working without pay. He’s been in it 19 years. The town where they live in Virginia consists of many Coast Guard families and thus the impact of the shutdown is magnified since it touches many. The spouses are turning to social media to come together and support one another - and it really gives insight into what it is like. Some share food and household goods (some have “couponer” stockpiles for example - “Anyone who needs shampoo or laundry soap, let me know” “I have an extra bag of dog food”), to alert each other to resources such as free pizza nights or pet food pantries, others are offering free before and after school care since childcare is a budget cut many have had to make. What started off as positive messages of “We’ve been through this before, we can do it again” is now starting to wear around the seams. “I don’t want my kids to see me worried”. “My daughter’s class has a school trip but we can’t afford to send her.” “I asked the school to reduce the cost of the school lunch but they said they can’t.” It’s been over a month and budgets are beginning to break and break hard.

While this shutdown may not have a long-term impact on the national economy, it does on the personal economy for these workers. It may take a while for them to recover. We’re coming up on the second rent or mortgage payment, the second car payment, the second utility bill. Put yourself in their shoes. How long could you go without?

  • What budget cuts would you have to make?
  • Would you have to dip into your retirement savings early? (Taxes and penalties might occur).
  • Would you have to sell something like a car or jewelry or other item to support your family?
  • Would you have issues because of illiquid assets or assets that are more difficult/generally take longer to sell (real estate for example)? How liquid are your assets?

One thing that is helpful if you wish to increase your personal savings is to automate the savings. Take it right out of your paycheck and send it via direct deposit into a savings account (you can split your pay into checking and into savings accounts). If it doesn’t come home, it doesn’t get spent. The secret is, don’t touch the savings. This is your emergency fund. Not having something to wear for a night out or a trip to Disney is not an emergency!

So, how much should you set aside? That depends. Something is definitely better than nothing. Look at potentially having 3 to 6 months of budget in your emergency fund, potentially more if you anticipate challenges. You might seek to enhance this savings fund during recessions, during times of high unemployment, or if you work in somewhat unstable industry.

This is food for thought and a wakeup call for all. $0.00. How long would you last?

The opinions are those of the author. This article is provided for general educational purposes and is not intended to provide specific advice for any individual. Seek professional advice before taking any action in regard to your finances.

Todd A. Slingerland, CFP®

6 Tower Place Albany, NY 12203

(518) 867-4000 x105




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