Solano Real Estate Scene: Government shutdown hurt families without cash reserves

Federal employees were paid 100 percent of their back pay after the record-breaking partial government shutdown. Most of these people were paid just in time to avoid having a 30-day late mortgage mark on their credit report. I would guess that 60 percent of those people had cash reserves, family assistance or the savvy financial intelligence and credit rating to borrow the money needed to avoid credit report damage, buy food and pay the bills, and 40 percent of those people had no cash reserves and many were probably unaware of the resources available to borrow short-term money until their paychecks came in. Private contractors that depend on the federal government for their revenue were more damaged by the partial shutdown and many of their employees were not given back pay for the time off. All financial advisers suggest three to six months worth of income should be readily available in reserves for their clients. I clearly remember being told this all the time when I was in my early 20s with a wife and two small children counting on me for food and shelter. I remember how difficult it was to get ahead and have any cash reserves at all. Every time Mary and I got a little ahead of the game and built our savings account up, the car would break down or some expense would come up that crushed our reserves. I was young and dumb. My income was increasing at 10 to 15 percent each year from the age of 21 to 26, but my expenses for my growing family was also growing – at 20 percent. We used credit cards and loans to buy things and cover those unexpected car repairs and figured there was nothing to worry about because my income was always increasing each year. We couldn’t afford to pay cash for that new stereo today but I would justify the purchase based on the idea that our income will be a lot bigger next year or we can always pay off the stereo loan in a few months when I get my bonus. Even worse was using credit cards to buy diapers and underwear for the kids and then paying off the credit card several years after the diapers were in the garbage and the kids had worn out the clothes. The only people who start out their adult lives with large amounts of cash reserves are young people who are taught this from their financially intelligent parents as young teenagers and start saving and investing money at an early age, or wealthy people who are given money from their parents and grandparents. I learned the hard way. My folks did an incredible job raising seven kids and somehow afforded to put all of us through Catholic school in San Francisco. They both worked and my dad always had two jobs, but they never taught us anything about money and our private school didn’t, either. If they had, I wouldn’t have had my Pacific Gas & Electric Co. power shut off a couple of times with two kids younger than 3 in 1984. Teach your kids early because the rich are getting richer and the poor are getting poorer – and the rich are financially intelligent.