With another Government shutdown looming over us in a few days, I thought that I would ask how you survived the last one. It was the longest running Government shutdown in the US history and effected over 800,000 workers for more than two paychecks.
As one of those Government workers and someone who barely has their finances in some resemblance of control, it was no small feat to survive such a gap in pay. Sure, the government supplied me with a letter to send to my creditors explaining that it wasn’t my fault that I wasn’t paying them. However, I’m sure that not only did mean very little to the creditors that the employees owed, but it meant very little to me as well. I won’t speak for everyone, but a letter from the government explaining why you weren’t paying your bills was about as good as the IOU from Dumb and Dumber for the Lamborghini. Nice gesture and all, but really?
I got lucky with timing…
I was fortunate in that I had recently sold two motorcycles and had cash sitting in the safe. You see, I had bought a new dirtbike for myself a year earlier. I had kept my old one for a “buddy bike” should someone come over and we wanted to ride. My son had recently outgrown his old bike and needed a new one. I just so happened to be storing one in my garage for my friends in Australia. So, I sold his old dirtbike as well. The plan was to use the money to buy the Australian’s bike when they arrived in January. All was going according to plan right up until the government shutdown on December 22nd.
The other 800,000 employees and I received one more paycheck on the 29th. We were then left on our own to survive the next month of bills, mortgages, food and gas. In my case, it was easier than for some because of the money I had set aside from the motorcycle sales.
But it wasn’t without concern.
Not knowing how long the government was going to be closed meant that you had no idea how much money you were going to need to survive it. In my case, I needed to plan my expenditures carefully so that my finite amount of cash could survive the unknown duration of the Government shutdown.
Cash is king but credit sure helps. Dave Ramsey was wrong.
I already had a Spending Plan in place so I knew what was due and when. With that list, I was able to determine what could be paid with credit card and what had to be paid with debit/cash. After all, you can’t pay a credit card bill with another credit card.
But I had a plan to kill two birds with one stone.
After referring to my list of bills, I chose debts that could be paid with a credit card. I then chose credit card debts that were due to be paid. So what I did was pay the debt with the credit card, then pay the credit card with the amount that the recently charged debt was worth. Clear as mud? Here, I’ll show you.
Capital One CC: Payment required = $166
House Electric bill: Payment required = $233
So, I pay the House Electric bill with the Capital One CC. Then I pay the Capital One CC with $233. Thereby covering the Electric bill and the Capital One CC bill with the same money and saving myself $166 that may be needed for food or whatever. I did this for as many debts as I could and the amount saved enabled me to not only survive the month, but to potentially be able to survive another month if I needed to. That meant that I wasn’t super stressed, yet.
Is this the best plan for getting out of debt? Absolutely not! But we’re not talking about that right now, we are talking about survival.
Living to fight another day
The cool part is that when I did get paid, I had a list of all of the bills that I needed to make good on. This is needed to get myself back to where I would have been if the Governement shutdown didn’t happen. All I had to do was look at what I paid with cash versus what was originally owed. I then had to apply the payments accordingly. In the example above, I needed to pay Capital One CC the $166 (minimum) that was required for the month. This way, I was not going backward in my plan to be debt free.
All in all, I didn’t “save” money, I just postponed it until after the Government shutdown.
But what about this next time?
The good news for my son is that he got his new dirtbike, paid for free and clear. The bad news for us is that the money from the dirtbikes is now in Australia. I was able to put some money aside though. I made it a priority due to another possible shutdown looming. Plus, I discovered that I like having that reserve should I need it. I wasn’t a huge believer in it because I figured “How long could a few thousand dollars possibly last?” Well, due to the Government shutdown over the whole month of January, I pretty much know. Dave Ramsey was right.
So, there it is.
As much as I would love to assure you that you will survive another Government shutdown unscathed, I cannot. Nor can I guarantee that this plan will be in your best interest. However, I wanted to share my plan with you so that maybe it can help some of you if not all.
If you were able to survive the Government shutdown, or even a layoff from your job, or any other financial setback, we would love to hear how you did it. These things happen and they rarely, if ever, happen at a good time. It is a fact of life, sadly. I hope that you comment in and are willing to share or even send me an email.
Talk to you soon,
Dave
Dave@Financialmoron.com