I have been watching a lot of American news this week and watching their spoiled brat politicians shut the government down. The politicians will all still get their pay cheques during the republican forced government shut down but the regular workers are in big trouble.
National Parks and government owned tourist attractions are closed and the government workers have been told to stay home. At the Statue Of Liberty it is not just the government workers who have been laid off. It is also the snack bar workers and souvenir sellers who are being told not to report to work. These support workers do not work for the government but rely on the traffic from the tourist attractions. Imagine how many thousands of people have been thrown in to sudden unemployment.
I will avoid making this article an opinion post about how loony I think those tea party people are but you can watch an interview with any of their constantly smiling spokespeople and know that they only care about making Obama lose and they don’t care anything about their own country or working class people. This post is about establishing credit in your life before something major blows up.
An interview I saw with a government museum worker who just purchased a house and has no idea how she will make her next mortgage payment spurred this post. People tend to be broke after buying their first home and they probably sunk all the money they had in to the down payment.
I am a big fan of emergency funds and I agree that everyone should have at least 6 months of easy to access funds but life doesn’t always work this way. I get paid in 3 days and right now I have less than $10 in my chequing account, less than $10 in my wallet and less than $100 in my different savings accounts, loose change and other cash I have stashed around the house. However I do not have an emergency fund right now and I am not adding anything to that fund. I am concentrating on debt and every penny I have is going there. ( http://solvingthemoneypuzzle.com/2013/09/14/the-intentional-end-to-my-emergency-fund/ )
While my solution may not be the best way having credit is something everyone should have available just in case. I have a Visa, a MasterCard and an American Express card. If 1 network is down or if 1 card is compromised I have 2 more to fall back on. The combined credit limit for these cards is $16,000. Having credits cards can be a temptation for a lot of people so carrying the cards in your wallet may not be a good idea. Having the available credit is a good idea. If your job stops suddenly and your furnace breaks you could pay for it with a credit card and only be required to make the minimum payments until life gets back on track again.
Credit cards do charge high rates of interest so having an established line of credit with a bank before the sh*# hits the fan is essential. Government workers without established credit will have a very rough, if not impossible time, getting credit from a bank when they are furloughed. Lines of credit have lower interest rates than credit cards and you only have to pay the interest every month and not the principal and having that available cash can be a life saver. I have a $100,000 line of credit.
I have debt and I hate it. I am trying as hard as I can to get rid of debt and I never want to go back to having debt again. Everyone should strive to be debt free and to have an emergency fund but life and the republicans throw unexpected bumps in the road. When my debt is finally gone and I will not cancel my line of credit. I will not cut up my credit cards. I will start to build an emergency fund and keep it in fairly liquid vehicles like short-term or cashable GICs (guaranteed investment certificates).
Being prepared for life’s emergencies is something we should all do. I can’t imagine the workers who sell snacks at the Statue Of Liberty have 6 months emergency funds but I do hope they have some credit to fall back on if this mess drags on.
Debt on January 1, 2013 $20,800.
Debt on October 1, 2013 $12,761.
Available credit $104,239.