Don’t Be Complacent Just Because Your Pay Is Safe

With John Boehner’s surprise resignation today, the political pundits have reduced the chances of government shutdown super-low.  As in, it’s probably not going to happen.  This is a great relief to the many military families wondering if a government shutdown might impact their pay.  However, just because a government shutdown is less likely this time, please don’t think that the possibility doesn’t continue to exist.  The analysts could be wrong, and we could still have a shutdown this October, or a shutdown could occur in the future.  While actual government shutdowns are blessedly infrequent, the potential for shutdown occurs each year when the government fails to pass a federal budget before the beginning of the fiscal year, or when our country has exhausted the amount of money it is permitted to borrow based upon the legislated debt ceiling.

What does this mean for military families?  In the short-term, it means that your 15 October 2015 pay is more likely to show up on time.  In the long-term, it doesn’t really mean anything.  Military families, just like everyone else, should always have a contingency plan for what they will do if their paycheck doesn’t arrive as anticipated.  Many military families put a tremendous amount of faith in the consistency of military pay.  While that pay regularity is a great thing, it also makes it easy to become complacent and not plan ahead.

At the very least, you need to have an emergency fund that will cover your minimum basic expenses for a month or two.  Three to six months is better, and a year’s worth of savings is ideal, particularly as you approach separation from the military.

Next, keeping your monthly obligations low will maximize your flexibility if pay problems occur.  While some expenses, like rent or mortgage payments, are difficult to eliminate, you can still reduce your monthly bills dramatically with some small steps.  Pay off consumer debt.  Pay cash for your car, or pay off your loan as soon as physically possible.  Buy your cell phone outright and only pay for the service each month.  Have high deductibles on your insurance policies (with appropriate savings to pay those deductibles if necessary) to keep your monthly premiums low.  Not only will these strategies help if you have pay problems of any sort, but they will make your general day-to-day life less stressful by lessening your money concerns.

Lastly, have a back-up plan for how you could slash expenses and/or generate additional income quickly if the situation required.  Maybe you could a get part-time job, or drop your cable TV service.  You could adopt a vegetarian diet, or you could rent out a spare room.  Perhaps you could sell things on Ebay or Craigslist, or use public transportation instead of driving your car.  There are literally thousands of ways to boost income and cut expenses, but sometimes it is hard to figure those things out when you’re in a crisis.  Much better to have a plan ahead of time.

While I am super-thrilled that we’re less likely to see a government shutdown next week, I am always concerned that military families don’t take seriously the possibility of pay delays due to legislative gridlock.  The threat is real, and we need to be prepared for whatever happens.  Not having a plan to care for your family is just irresponsible.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.