Q. My husband was on strike. This is a risk every three years when contract time comes. We knew it was coming and were able to put a little away to see us through, but we’d love suggestions on how to plan for something like this. We do have an emergency fund but we hate to touch it.
— Strike family
A. We’re glad you and your husband made it though the strike.
Knowing a strike is always a possibility for any union worker means you should take steps to be prepared.
Strikes or lockouts can have a devastating impact on a family’s financial situation, said Bill Connington of Connington Wealth Management in Paramus.
“Should the striking worker be the sole bread winner, it can really lead to a difficult financial situation and comes with the additional uncertainty surrounding the duration of any work stoppage,” he said. “That is why having a labor contingency plan is crucial to those that will be affected.”
Regardless of the duration of a strike, a well thought out financial plan can lessen the impact and stress of any labor strike, Connington said
Start with a strike reserve.
Connington said non-union workers should generally have a cash reserve of three to six months worth of expenses; a union worker should have at least nine months put away. These are the dollars to pay for unexpected expenses and your fixed monthly bills, Connington said.
He recommends you check with your union to see what salary continuance plans they provide. Most unions have a strike fund which pays a small weekly wage, he said.
Prior to any strike, you should prepare a budget.
“This will help you to prepare for and reduce the stress associated with a strike from a financial point of view,” Connington said. “If you prepare for this contingency you will be better able to handle the financial commitments you have.”
He recommends you make a detailed list of all your monthly expenses in order of importance. Then separate your expenses by fixed costs, such as your mortgage, and variable costs, such as vacations.
“Then determine which costs can be cut during the strike and stick to the budget,” he said. “Of course you need to have everyone in the household stick to it.”
If it looks as if you will not be able to pay a big-ticket item such as your mortgage, Connington recommends picking up the phone to see if your lender would help with a special arrangement. He said many lenders are receptive to deferring payments and some will let you skip a month on your mortgage or make an interest-only payment. But remember you’ll need to pick up the phone and ask, and even try to have the conversation ahead of time as part of your strike contingency plan. (Remember, missed mortgage payments can hurt your credit. You can see where your credit currently stands by viewing your two free scores, updated every 14 days, on Credit.com.)
Other options would be to reduce credit card debt, or have none all together, refinance high interest debt to lower rates, and renegotiate your cell phone, cable or internet bills, Connington said. You can also stock up during non-strike times on non-perishables such as packaged foods, household items and taking care of home repairs on your house.
Also consider having a home equity line of credit available as a back up for your back-up plans.
Mostly, though, Connington said should have a well thought out plan not only for times when on strike but for your family’s financial future.
“Strikes are unfortunate, and ultimately a burden on your finances, but taking a proactive approach to being prepared will reduce the stress and financial burdens of a suddenly reduced paycheck with no definitive end in sight,” he said.
More Money-Saving Reads:
- The Credit.com Credit Reports Learning Center
- What’s a Good Credit Score?
- How Credit Impacts Your Day-to-Day Life