First came the shock of higher prices at the gas pump. Then groceries and the cost of just about everything else followed. If you\u2019re living paycheck to paycheck, you may wonder, \u201cWhat\u2019s next?\u201d<\/p>\n
The possibility of an economic downturn.<\/p>\n
Here\u2019s how to prepare and some resources to know about, particularly for\u00a0low-income households.<\/p>\n
Michael Sullivan, a financial educator with Take Charge America, a nonprofit credit counseling agency, says he is seeing people struggling with inflation, not just in higher prices for groceries and housing but also with expenses related to transportation.<\/p>\n
\u201cI find more people concerned about vehicle issues,\u201d he says. \u201cTheir very livelihood depends on keeping an automobile running so that they can get to work and to wherever they have to be. It\u2019s so expensive to maintain one, and \u2014 if it happens to die \u2014 buying a new one.\u201d<\/p>\n
Sullivan urges people to avoid \u201cbuy here, pay here\u201d car lots. Such \u201cbad credit dealers\u201d tend to offer loans at very high interest rates and don\u2019t usually provide prompt payment reports to credit rating agencies, which doesn\u2019t help your credit score. He also suggests searching for an affordable older used vehicle. That may require knowing a reliable mechanic for when fixes are needed.<\/p>\n
\u201cBeing resourceful, learning how to repair things yourself or finding someplace that can keep your vehicle running: Those things have become, frankly, critical skill areas,\u201d he says.<\/p>\n
Job security is also on the minds of those living without a financial cushion. Layoffs are increasing, and employment is expected to tighten in the coming months. Workers might consider being proactive in adding value at their current jobs by honing existing skills or developing new ones and taking on additional responsibilities. Networking for future opportunities could also pay off down the road.<\/p>\n
\u201cThis is probably not a good time to chase an extra 50 cents an hour, even though I understand inflation demands more money,\u201d Sullivan says. With the economy becoming a bit shaky, he believes it\u2019s a good time to look for stability.<\/p>\n
\u201cChanging jobs puts the employee at the bottom of the seniority scale. Certainly, it is good to get a raise, but it is better to have a steady paycheck,\u201d he adds.<\/p>\n
Also see: <\/strong>As child-care costs outpace inflation, some parents reach breaking point: \u2018That\u2019s more than our mortgage\u2019<\/p>\n Acknowledging that building an emergency savings account is out of reach for many households, Sullivan offers a backup plan.<\/p>\n He says having available spending power on a credit card may be the best option for a situation requiring an immediate financial solution.<\/p>\n \u201cHave one card, don\u2019t use it; keep it for emergencies,\u201d Sullivan said. The credit card needs to be available only if and when you really need it.<\/p>\n Plus:<\/strong> What happens if you can\u2019t pay your taxes? IRS has a payment plan \u2014 but read this before you sign up.<\/p>\n He also urges low-income families to consider \u201cwhat-if scenarios.\u201d<\/p>\n What will you do if you lose your job, if your rent goes up or if your car dies?<\/p>\n \u201cInstead of just laying awake at night and being anxious about it, which is what people say they\u2019re doing, think about it,\u201d he says. \u201cIs there a Community Action Program in your community that, if you lose your job, can help with rent or utilities? Are there state programs that can help you with rent assistance or other kinds of assistance? Are there charities that can provide some of these things?\u201d<\/p>\n There are many resources offering a financial bridge for low-income households. Let\u2019s get to that.<\/p>\n The Administration for Children and Families, a division of the U.S. Department of Health & Human Services, says households looking for assistance should contact the\u00a0human service agencies in their state.<\/p>\n For example, utility costs are rising, and there is help dedicated to low-income households.<\/p>\n \u201cFamilies need help with their utility bills now more than ever. That\u2019s where ACF\u2019s Office of Community Services\u2019 programs come in,\u201d Lanikque Howard, director of the Office of Community Services, said in an email.<\/p>\n \u201cOCS administers\u00a0seven programs\u00a0to help low-income households with basic needs. Two of these programs help with utility bills,\u201d Howard added.<\/p>\n The Low Income Home Energy Assistance Program can help families with their heating and cooling bills, and the Low Income Household Water Assistance Program can assist with water and wastewater bills.<\/p>\n \u201cBoth programs can lower utility bills, prevent service disconnections, and even pay past-due balances to help people get reconnected to energy and water service,\u201d Howard said.<\/p>\n To find help with your heating or cooling bills, visit energyhelp.us or call the National Energy Assistance Hotline at 866-674-6327 to locate a LIHEAP provider near you. To get help with water and wastewater bills, visit waterhelp.info to find a LIHWAP provider in your area.<\/p>\nA backup plan for those without emergency savings<\/strong><\/h2>\n
Consider a \u2018what-if\u2019 scenario<\/strong><\/h2>\n
Resources for low-income households<\/strong><\/h2>\n