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How Govt Shutdown Will Affect Your Personal Finances

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Wednesday, 23 January 2019 01:47 PM Current | Bio | Archive

The government shutdown affects everyone, even those in the private sector. But it affects us all differently, particularly when it comes to the pocketbook.

That’s why it’s essential that people understand the government shutdown from their own unique perspectives—as well as some strategies they can use to mitigate the shutdown’s personal financial impact.

If You’re a Government Worker

If you depend on the government for your income, chances are you’re already well versed in government shutdowns and understand what they entail for you. Even so, it can be a scary and downright confusing time to manage your personal finances. Here’s what you’ll need to keep in mind:

  • Watch your limitations with other jobs. The “get a job” solution isn’t as simple as it might seem. Government workers, according to CNBC, can often be subject to restrictions on other work they can pick up, which can make it even more difficult to secure an income during a shutdown.
  • Exploit savings and points. Running out of income would qualify as an emergency for which you can tap an emergency savings fund, especially since workers should expect back pay for the days missed during the shutdown. If you have credit card points stacked away for a rainy day, this may also be the time to use them for simple purchases like groceries.
  • Transfer credit card debt to a 0% APR credit card. Those government workers with credit card debt could stand to benefit from this strategy, writes Zach Friedman at Forbes, which can help mitigate the short-term pain of a shutdown by avoiding the heavy interest of credit card debt. In these scenarios, reducing your regular payments is essential.

If You Depend on Government Benefits

The time to start planning for the worst is now. Don’t rest on your laurels and assume that the politicians in Washington will figure things out. Instead, prepare for the worst so you’re ready in case it does happen. Here’s what you’ll need to know:

  • Food benefits. One senior Republican Senate staffer has already suggested it may take major events to bring both sides to the table in this shutdown and that there’s potential that the well for food stamp benefits will go dry in late March.
  • Look for extra work. If you’re able to work, now’s the time to begin looking for extra, short-term, or part-time work. That extra income, for some, could be the only way to mitigate the shortfall caused by the government shutdown.
  • Contact the relevant government helpline. You may want to look into the benefits you currently receive and call up the relevant government worker who can help—and it’s a better idea to do this now, before you find out if there aren’t any answers later.

If You’re in the Private Sector

If you’re in the private sector, it’s tempting to look at the government shutdown as something that won’t affect you personally. But the private sector can also be affected as government activities slow down and government employees on furlough have less money to spend. Here are some tips for keeping your financial sanity intact during the shutdown:

  • Be wary of tapping into retirement funds. If you need short-term funding because of a lack of business during the government shutdown, be careful. Using retirement funds to make up for shortfalls can be extremely costly, with fees and an associated tax burden that’s far more than the short term money is often worth.
  • Don’t count on your tax refund. Don’t worry—you’ll get your tax refund. However, there’s some potential for delayed refunds, which means that even those in the private sector shouldn’t rely on their tax refunds to pay essential bills or fund vacations. Don’t go into debt to cover for a delayed refund, either. You’ll also want to keep in mind, as per MarketWatch, that IRS call sites will likely be down for a large remainder of the shutdown, which means you’ll have to wait to get some of your tax questions answered. Consult an accountant for help during tax season.
  • Look for ways to supplement your income. Even for people in the private sector, there’s some potential that the government shutdown could decrease demand in your particular line of work. Stay on the lookout for ways to increase your income in your business, or perhaps even look for part-time work to supplement your regular income.

The government shutdown can be scary no matter your situation, but keep in mind that with enough forethought and planning, there are plenty of tips and strategies you can employ to minimize the financial impact, or even come out ahead.

Joe Resendiz is a Research Analyst at ValuePenguin, where he focuses on personal finance and credit research to assist consumers. Previously, Joe specialized on public sector and infrastructure financing at Goldman Sachs. He graduated from the University of Texas at Austin with a BBA in Finance.

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The government shutdown affects everyone, even those in the private sector. But it affects us all differently, particularly when it comes to the pocketbook.
government, shutdown, personal, finances
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2019-47-23
Wednesday, 23 January 2019 01:47 PM
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