Free To Get Rich

In our country’s state of financial uncertainty, it’s hard to imagine our states’ governments shutting down.  What if the money to operate our states just isn’t there anymore?  On a state-by-state basis, state workers have been facing spending freezes and potential layoffs. 

So what happens if your state government shuts down?  CNN Money talks about it here:

“State budgets are so squeezed that some governors are threatening to shut down state operations if lawmakers can’t address massive spending shortfalls. States are facing shutdowns because of the dismal condition of their finances.

Governors and lawmakers have been reluctant to make deep and unappealing cuts, particularly to education, health and social services, but have also been loathe to raise taxes.”

-Read the rest of What happens if your state government shuts down?

What to Do if You are a State Worker Facing Layoff

No amount of great job performance can counteract the funding for your job not being available anymore.  If you can’t be paid, you don’t have a job – plain and simple.  It won’t matter if you’re the best worker in the office, you’ll be looking for a new job.

There are some important steps you can take now if you’re afraid that your state government may be shutting down and your job may be in jeopardy. 

1.  Prepare to look for a job in the public sector.

• Education:  Go back to school, take college classes to refresh your skills, or get certifications that will help you get a new job.
• Resume:  Update your resume with any skills you have that might give you an edge over other applicants.
• Recommendation:  Get letters of recommendation from managers, supervisors, and coworkers.

2.  Get your finances in order.

• Emergency Fund:  If you don’t have an emergency fund in place already, put one together as fast as possible.  Make sure you stash enough to cover living expenses for 6-9 months, in the event you can’t find a new job before then.
• Get Frugal:  Cut out the frills and spending on non-essentials.  Transform Yourself from a Money Waster into a Money Saver – A Complete Frugal Makeover

Above the need for good credit is the need for personal security.  While paying off credit cards improves your credit AND provides that financial cushion (since the credit will be available if you need it), “pay off my credit cards” has been the first steps in a strategy towards financial independence.  However…

Now that the banks are closing down credit cards whether they have been recently used or not, and whether or not they have been used responsibly – it’s important in this current economic environment that we first protect ourselves, and look out for our credit scores secondly.

In the event that you are laid off, or find yourself otherwise unable to work – you must have a way of paying your bills.  You will either need credit or cash available. 

The problem with the “pay off my credit cards” strategy is that you can no longer count on having the credit available when you need it.  You may be surprised to find out that the bank is no longer interested in offering that debt availability to you.  They can reduce your credit limit, raise your interest rate, or even close out your credit card account altogether.

Since paying off credit card balances works as a safety cushion only when you can count on the credit being available when you need it, the old advice of “establish savings while paying off your credit card debt” must be sidelined until you have got enough set aside to live on if you have to.

How to Grow your Emergency Fund

• Until you’ve got your emergency plan funded, switch to paying minimums on the credit cards, and get that emergency fund in place.
• Ensure that you have enough cash to live on for at least 3 months.
• Once you’re at 3 months of cushion in your emergency fund, split your efforts between paying off credit card balances and growing your emergency fund to cover 6 months of expenses.

When you’ve got an emergency fund that is able to support you during hard times, it’s safe to resume your strategy of “pay off my credit cards” by switching back to paying off your credit card balances as quickly as possible.