Communication breakdowns between Democrats and Republicans could lead to the first U.S. Government shutdown since 1995-96 when then President Bill Clinton and congressional Republicans were deadlocked on funding, shutting the government down for 21 days, it’s important to understand what it means to services and programs Americans have come to rely on.
Military will continue to operate, including border patrols, law enforcement, guarding federal prisons. Military personnel would serve without out pay and civilian employees would be furloughed.
Air traffic controllers, Transportation security administration (TSA) workers and other transportation workers would continue to work. Gun purchase background checks would continue. Many of the other functions like processing of permits for alcohol, explosives, and hiring of new agents would be on hold.
Previously approved federal money for recovery would still be available, but no new requests would be accepted until shutdown is lifted.
Social Security checks will continue to be sent out, but local offices will be closed and staff will be furloughed.
Federal courts would continue to operate. Bankruptcy court would be suspended. Court staff members would be furloughed.
Medicare and Medicaid
Payments will continue to doctors, but newly eligible for the programs could see delays in processing of their enrollment.
These are just a few of the possible impacts and closures that would be a result of a government shutdown. The economy impact could be millions or possible billions of dollars if the shutdown lasts for a prolonged period of time. In 1996 the shutdown cost $1.4 billion. Most of the cost was back pay for the large number of furloughed federal employees. Another larger cost was the stopping of operations and starting them back up. It is not clear what financial impact a shutdown would have on the stock market and unemployment rates.
Personal Finance Take Aways
As I listen to the news reports and read newspaper stories on the Government bickering, I can make the leap to personal finance. Sure I’m not dealing with a trillion dollar budget or multiple agencies, but at the core of the problem there are some basic concepts that I can translate.
Weather you’re balancing a trillion dollar budget or your families; you need to have a plan. You need to understand how much money you have coming in and how much you have going out. A written budget is the best way to accomplish this. You can use an excel spreadsheet, software, or apps but collect the information is the first step in getting organized and prevented you from overspending. In the budget you can set priority on expense. Food, housing, transportation and heating will typically get higher priority over gifts, entertainment, etc. Without the plan you may not realize where you are spending your money each month.
Communicating and agreeing on the plan with the members of the family is just as important as the plan and budget itself. I’ll let you think about how the Democrats and Republicans handle that one. If you or your spouse is not in agreement with the budget it will never work. It’s simple to state, but may not be that simple to accomplish. It may take some give and take, sacrifices on both side and untimely compromise to make it work. If paying down debt you need to understand that it will not last forever and that short term sacrifices will need to be made for long term goals. Keeping these goals in mind when reviewing the plan will keep the communicate open and family focused. Looping children into the plan is also smart. They need to understand how money is being spent. Talking to them about budget items that interest them like toys, cell phones, clothes etc. will help keep them interested and may help avoid them asking for items that are not part of the plan.
Once you have a plan, agreement on that plan, and open communication all that is left is to execute. As you execute you may find that you will need to update the plan. If changes in income or expenses occur it will be time to adjust. You may now have more money available to attack debt repayment or you may need to make cut in other areas to cover new expenses. What ever the case may be if you re-open the plan, communicate and agree you will easily be able to move forward.
I don’t have the details of your budget so these are just the general concepts to get you on the right path. They have been successful in helping my family in paying off close to $80k in consumer debt over the past 39 months.
What impact do you think the possible Government shutdown will have on the economy? What steps do you follow with your own budget to avoid communication breakdowns?