After the snow is melted and the kids have said goodbye to the last snowman in the yard, the economic impact of the recent winter storms will linger for many Tennessee families.
Consumer experts with The University of Tennessee (UT) Extension said winter weather is especially hard on families whose breadwinners are hourly workers. Hourly workers are not typically paid for days that they don’t work, and may not be eligible for paid leave.
“Tennessee has around 1,575,000 hourly workers,” said Dena Wise, professor and consumer economic specialist with UT Extension. “The collective economic impact of those workers losing one day’s pay across the state is more than $90 million. If each worker loses three days’ pay because of weather events during the winter, the statewide impact is more than $274 million.”
In addition to lost wages, Wise said families often have additional weather-related expenses.
“The largest of those are usually the cost of child care for children out of school and increased heating costs. Other expenses related to weather may include auto towing and service calls, food losses when electric refrigerators and freezers do not work, landscape losses and household repair of frozen pipes or other damages,” Wise said.
“Altogether, a period of wintery weather can result in a serious financial setback to a household that struggles to get by paycheck to paycheck,” said Dr. Christopher Sneed, Family & Consumer Sciences educator with UT Extension in Blount County.
For households who find themselves in that situation, Sneed recommends the following:
• Triage your debt. List all the bills that you have due during a particular time period. Ask yourself, based on the money you have, which bills should be paid as a first priority, second priority and third priority. Remember that housing costs including utilities as well as food, medication, and reliable transportation are the first priorities for payment. Unsecured debt including credit card debt, installment loans, and payments for luxury services (hair, nails, dry cleaning, etc.) should be paid when you have additional money available.
• Communicate early with creditors. If you see that you will not be able to fully pay a bill, your first phone call should be to that creditor. Before you call, determine what payments you can offer your creditor. Explain to them your current situation including your reduction in income. Discuss options for reduced payments including interest only payments or temporary payment reductions. Above all, remember . . . creditors are more willing to work with you if you make contact early and initially.
• Keep a record. As you make contact with your creditors explaining your reduction in income, keep up with the creditors you have called, the name of the person or persons with whom you have spoken as well as some brief notes concerning the outcomes of your discussions. This record will be invaluable should you need to make additional follow-up phone calls with your creditors.
• Take stock. Assess the financial and non-financial resources your family has that can be useful for making ends meet during this period of income reduction. Financial resources including your savings can be used during this time. If you decide to use your savings, begin drawing down money from your passbook savings accounts first. Withdrawing funds from these accounts are often not penalized. If you have a Certificate of Deposit (CD), you may be tempted to cash it in. Be warned if you do cash in your CD short of its maturity date, you will end up losing money to fees and reduced earnings.
• Find some things to sell. Non-financial assets including collectables, electronics, and some clothing items can be sold through online auctions or online classified sites. Since your need for cash is immediate, you may not get the best price for these items. The actual amount you are able to generate through a quick sell of the items must be weighed against their financial and sentimental value.
• Beware of promises for quick fixes. Scammers often use natural disasters to peddle fraudulent or overpriced goods and services. Be on the lookout for unqualified repair technicians, door-to-door offers and out-of-town solicitors.
• Normal will come again. Remember and remind yourself, your partner, your children, and other family members that this reduction in income is only temporary. With good management and a little extra initiative, warmer weather can find you on more solid financial footing.
UT Extension provides a gateway to the University of Tennessee as the outreach unit of the Institute of Agriculture. With an office in every Tennessee county, UT Extension delivers educational programs and research-based information to citizens throughout the state.
For more information on this or other family and consumer sciences related topics, contact Shelly Barnes, Family and Consumer Sciences Extension agent for UT Extension in Wilson County. Barnes can be reached at [email protected], or at 615-444-9584.