Federal Employees and Contractors Do Not Have Enough Savings
One of the saddest things about our "great economy" is that over half of all American households have less than $1000 in cash savings. And according to this news article, federal workers are subsisting on charitable food donations and cheap food as they wait for paychecks.

One of the great myths about government work is that everyone gets paid really well. Articles like this 2015 piece from The Huffington Post taught us that federal employees are paid really well compared to the private sector. But the study inspiring that article counted the top-paid employees' salaries when calculating the average federal employee salary. In fact, most federal employees earn $50,000 a year or less. And depending on which part of the country they live in, that may not be much money.

If you earn $150,000 a year in the San Francisco area, for example, you're not going to live very well. Rents for 2-bedroom apartments can be as high as $3000-4000 per month. When I lived there 7 years ago I was paying over $2000 a month in rent, and I was grandfathered into an older rental contract when my landlord began upgrading the units. They were charging as much as $2500 a month for 2-bedroom units when I left in late 2012. I've read it's much worse now.

The people directly affected by the partial government shutdown are eating through their savings, if they had any to begin with. And as anyone who has followed economic news over the past year knows, a growing number of business leaders and economists are afraid we may enter a new recession later this year or early next year. That doesn't leave much time for people who are currently employed to beef up their savings.

The age-old debate of whether you should pay off your debt or put money in the bank is misleading. Super-wealthy financial gurus who make their money by selling books and seminars to people who struggle to pay their bills always insist you should pay your debts as quickly as possible. But when people follow that advice they leave nothing in the bank to cover last-minute expenses.

When you need to borrow $1000 to cover an emergency expense, where will you get it? If you have a 401(k) or Whole/Universal life insurance policy you may be able to take out a loan to cover that expense. You'll be required to pay interest on your loan, and the interest goes back to you. That's not so bad. But you have to pay an administrative fee for those loans.

It would be better to borrow the money from a savings account you manage and then pay that loan back from your next paycheck, plus a little extra.

People who drop $25 a month into a savings account will only save $300 a year. But that adds up. After 10 years you have a $3000 savings balance, and imagine how much "interest" you will have paid yourself after borrowing from savings and paying it back right away.

The "paying it back" part is where people stumble. But when it comes to managing cash flow, you should always pay yourself first. Building up a cash savings helps you manage any interruption in income. I wish I had understood that when I was much younger. I tried to follow the advice of all the gurus and paid off all my debts. Did that more than once, always leaving myself with nothing in the bank.

I'm glad people are reaching out to help federal employees during this crisis. Our political leaders on both sides of the aisle have betrayed the national trust. Both Republicans and Democrats are keeping this shutdown going because they want to use the memory of it against each other in the next election. I am NOT going to forget that both parties are equally guilty of hanging American citizens out to dry for their political gains.

These federal workers (employees and contractors alike) did not ask to be put in this position. I am sure they want to keep their homes and to feed their children. We should not be blaming one side or the other. We should be holding both parties accountable for this perfectly avoidable mess.
Amen to that, Michael. Well put.
Sitting quietly, doing nothing,
Spring comes, and the grass grows by itself.
It only gets me angry that this is allowed to happen.
Don't insult the precious, my precious!:book:
badlands Wrote:It only gets me angry that this is allowed to happen.

I think people SHOULD be upset about it, but we also elect the politicians to office who create these stupid standoffs. Ultimately the responsibility for our bad government leadership is the responsibility of the voters. They had alternatives from which to choose but they chose to put Trump, Pelosi, Schumer, and McConnell in office (again in the case of 3 of them).

As long as these kinds of politicians can win re-election, we'll have to put up with their ruthless "Party First" brand of governing.

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