If Congress cannot agree on a budget by March 4, a full government shutdown is a possibility. Image: Flickr / laurapadgett / CC-BY

On March 4, the budget that runs the federal government will expire. There are rumors that there may be a 2011 government shutdown. A government shutdown 2011 is a possibility, but lawmakers are working to prevent the shutdown.

The basics of a government shutdown 2011

Facing the possibility of a government shutdown in 2011, it is important to understand what would happen. The last time a full government shutdown happened in 1998, just about everything government-run simply shut down. There have been other government shutdowns since 1998, but they were very short-term, partial shutdowns that affected portions of the federal government, but not the whole thing. A full government shutdown in 2011 would mean that everything from Social Security to Veteran’s Affairs would simply cease to function. National parks shut down, passport agencies shut their doors, and federal employees have an unpaid furlough. Some select self-funding agencies, such as the USPS, may stay open. Medical facilities would also continue to operate but with a skeleton crew.

How a government shutdown happens

The federal government requires a budget to operate, and that federal budget has to be passed by both houses of Congress and signed by the president. If a budget isn’t passed, then the agencies of the federal government do not know what funding is available, and must shutter their doors until there is a budget to operate with. As in 1998, Congressional debates over spending cuts are holding back the passage of a budget.

What a 2011 government shutdown could mean

If the government shutdown of 2011 actually happens, the ramifications would be huge. Congress would then, as now, be under huge pressure to pass a budget. That means that Democrats and Republicans would have to come to some kind of an accord on spending. In 1998, the government shutdown preceded a period of balanced budget spending that created a surplus of federal money — the first and only time that has happened in the last 15 years.

Sources

CNN.com
Washington Monthly

What is Net Worth?

Let’s start by defining net worth. Simply, your net worth is all that you own minus all that you owe: the financial difference between your assets and debts. It’s the reason we all work for a living, for the hope that what we owe is actually less than what we own!

Improve your NetworthIQ

Without heaps of instant cash, improving your net worth can be a challenge. There are hundreds of tools and helpful hints to get you started (or keep you) on the right financial track. A great way to improve your net worth is to improve your NetworthIQ. NetworthIQ is a free online tool that helps you track, share and compare your net worth. NetworthIQ helps you keep track of your assets, debts and liabilities.

Make a budget

Many people have a hard time improving their net worth because they aren’t keeping track of what they are making and spending. That is why creating a budget is so important! A budget is the best place to start if you want to increase your net worth. NetworthIQ is just one of many online tools that can help you budget. Mint.com is another fantastic budgeting site.

Improve your net worth

With a way to keep track of your finances, you can start to build your net worth. Save, save, save! Improving your net worth will take time and energy, and you have to start somewhere. It is much easier if you already have a savings base, but what if your debts outweigh your assets? Or what if your net worth is zero?

Instant cash can help

One of those mountains of instant cash would come in handy if your net worth is zero or if it’s negative. But like NetworthIQ, there are other online tools that can help you work on your net worth, like online payday loans. Online payday loans are a form of instant cash,. Hard work, budgeting tools like NetworthIQ, and some instant cash will have you well on your way to increasing your net worth.

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Not Creating a Budget

Besides planning to pay a few basic bills, a lot of people who struggle with debt do so because they don’t carefully plan their spending. Instead of creating a written itemization of how every dime of their income will be spent or saved, some people simply wing it. While a cash advance can help people out in a bind, everyone should create a personal budget in order to avoid creating debt.

Failing to Pay Yourself First

In crafting a personal budget, a person must remember to pay herself a predetermined amount of money out of each paycheck. To not do so creates a level of frustration of working without reward. It is not surprising that people who neglect paying themselves a percentage of their income end up ditching a personal budget not long after its creation due to a lack of personal satisfaction.

Not Having a Rainy Day Savings

Similar to paying one’s self is having a rainy day savings set aside. People who neglect to designate a percentage of their earnings to a savings account find themselves in a bind when an unforeseen expense or emergency arises. Although a loan till payday is available for these times of need, a rainy day savings account specifically designated for unexpected circumstances adds to a person’s feelings of comfort and security, not to mention such a savings protects people from falling too far into debt when these circumstances occur.

Not Recording Purchases

Most people carry a debit card. For some, this convenience has almost completely replaced the practice of carrying cash. Unfortunately, however, some people end up making major financial mistakes while using debit cards simply because they forget to record small purchases like a cup of coffee or a small item purchased on any given day.

It is not unusual for such purchases to cause a person’s account to be overdrawn and result in costly bank fees. To avoid this, a person can create room for these incidental purchases in a personal budget and either plan to carry cash to pay for them, purchase a gift card that will cover these purchases or just remember to write each one down and carefully balance one’s checkbook accordingly.

Plastic People

Perhaps the largest and the most frequent of all financial mistakes that people make is when individuals rely on credit cards to pay for daily needs. Even worse are individuals who use plastic to pay for items that they don’t need, but that they want anyway. This is also the fastest and easiest way to fall into serious debt, particularly if only the minimum balance is paid on credit card bills each month as interest payments and other fees continue to accrue. Experts agree that credit should only be used when absolutely necessary, as the cost of using plastic is simply too high to use on a daily basis.

While most people make costly financial mistakes once in a while, everyone can avoid making them with careful planning, budgeting, record keeping, and self-discipline. If a mistake is learned from and adds to a person’s financial education, it has value. If it is ignored and repeated, it is a complete loss for the one making the mistake and can seriously compromise one’s financial future.

Everyone is in search of emergency money. No one wants to get caught with a sudden hospital, automobile or appliance bill and have no way to pay for the expense. In today’s precarious financial climate, it’s crucial for everyone to find a way to bulk up their emergency funds. The best way to find extra money is to budget. It’s a great way to see where a consumer stands financially and see what he or she has to do to improve their situation. Budgets are useful tools that can be created with intricate software or a simple notebook.

Despite the necessity of a budget

Despite their importance, there are still some consumers making mistakes with them. Here are the top mistakes people make with their budgets.

1.) No budget. There is still a fraction of the population that doesn’t budget at all. Keeping track of monthly income and expenses can give a consumer a clear picture of how well, or not so well, money is working for them. For example, if a budget shows that a consumer is spending hundreds on clothing and dining in a month, that’s not a good use of cash. It would be better to scale back and fuel that money into either savings or investments.

2.) Lack of math skill. Too many people fall back on a lack of math skill as their reason to not have a budget. In today’s technological age, though, there is no reason to not have a budget. Software, from Microsoft’s Money to Quicken to lesser-known brands, can do the work of organizing a budget. All the user has to do is input their spending and income. The software does the rest. For those who want a very basic budget, a notebook and pen can do the trick, too. The only skill needed is consistency.

3.) Job security. There is also a growing number of consumers who believe that if their job is secure, they can count on money coming in and don’t need to budget. Whether a consumer is working for a huge corporation or a mom-and-pop business, they are at risk. The economy is very unstable and has been for over 12 months now. Though the recession is over, having a good emergency money fund was crucial to the survival of many Americans who were laid off unexpectedly. Employers are still holding back when it comes to raises, hiring and offering benefits and no one knows how long it will take for them to return to old ways of operating.

4.) Unemployment benefits are there. The reality of government-sponsored unemployment is that it is not completely reliable. If an employee leaves their job or gets fired, unemployment most likely won’t be approved. Plus, with the recession bringing the unemployment rate up to well-over 10%, the number of benefits going out is quickly draining the government-sponsored benefit plan.

5.) Not my job. No one anticipates tragedy like losing a job or an unmanageable emergency expense, but they do happen. The only way to mitigate them is to be prepared the best way possible, and that includes having a good working budget that is up to date. It also should be working for a consumer’s specific financial situation.

A difficult look at finances

In the end, a budget can save consumers from financial disaster. For anyone looking to bulk up their emergency money fund, it’s crucial to look at revenue and expenses and then make wise decisions based on the financial position. Much of saving can be done automatically due to banks setting up auto-transfers and shouldn’t be a task to remember. It may seem difficult to look at finances with a fine-toothed comb, but it is critical if liquid assets are to be built.

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Now that the holidays are over, many Americans are mired in debt. Sure it was easy to pull out credit cards for expenses, but now is when the credit card bills are coming in. Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, said, “It will only get worse as the bills continue to arrive…putting it off will only result in ruined credit and more stress.”

One of the most important tips the National Foundation for Credit Counseling gives to all its clients is to set a goal date when holiday debt will be paid off. Cunningham stated, “Setting a goal date like March 31, for example, can give you a clear picture of what you have to do to pay down debt.”

Credit cards and the future

When you are trying to get out of debt, it is important to stop purchasing on credit. Though small charges seem to be more easily handled with plastic, they add up quickly. Cunningham also instructs her clients that stretching out debt payments as a result of a holiday spending spree, only negates savings. Once the holidays are over, leave the credit card at home. If you can’t afford to pay for an item with cash then leave it at the store. Lynn Mayabb, financial planner at BKD Wealth Advisors said, “It is much harder to pay for something if you have to pull cash out of your wallet.” Research shows that people who pay with cash end up spending about 20% less than those who use credit. Using cash can cut back substantially on frivolity.

Budgeting post-holiday season is crucial

Finding a workable budget is also important to getting out from under Christmas debt. Experts warn that budgeting isn’t always fun. In fact, it can be a difficult task to honestly assess what comes in versus what goes out on a monthly basis. In the end though, it’s the only way to get an accurate picture of where your money is going and what changes need to be made.

The best way to get started with a budget is to start tracking every expense for one month. Cunningham said, “It can be as intricate as buying a software program to help you track expenses, using a spreadsheet or getting a notebook for 99 cents.” It’s also important to note everything from a big-ticket item’s purchase to a cup of coffee. You want as accurate a picture of your fiscal month as possible. That way you can make the necessary changes to realistically reach your financial goals.

Check out the paperwork

Finally, it’s important to take time to look at paperwork that may reveal money drains. Reviewing your tax withholding on your W-4 form can show you whether or not you are deducting more than you should every month. Reading credit card statements can show you if there are additional charges you were not aware of. Cunningham said, “You’d be surprised at how many people are unaware of a $9.99 charge to their credit cards that came with a free-trial. Sure it may not sound like a lot, but over the course of a year, that adds up to almost $120.”

No debt is good debt

Debt is something that can easily grow out of control during the holiday season. It’s an expensive time for many Americans and a lot of stress comes along with it. Addressing debt early on is key to overcoming it. It may take a few months, but paying it down will save money in the end. When your credit card statement shows a balance of zero, you will be thankful you conquered it.

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Poor Debt Management Can Affect Generations

Most who struggle with personal finance, debt and credit issues do so because they never learned how to properly budget money. It is likely that these same people have more than one parent, siblings and other close relatives who also have personal finance debt issues. Most never learned to differentiate between needs and wants or are not very disciplined in spending accordingly. Left unchecked, such behavior has caused individuals to fall deeply into debt. Just as in situations of physical abuse and substance abuse, the dysfunctional handling of debt and credit is often passed down to future generations. Poor financial decision making, however, is much easier to rectify than the aforementioned dysfunctions.

Everyone Has Control Over Their Own Financial Future

In looking at personal finance, debt and credit, it is important to understand that an individual has ultimate control over their destiny in any of these arenas. While many feel as though their spending is out of control, the exact opposite is true. Even if there are psychological reasons as to why a person’s personal finance, debt and credit are spiraling out of control, as is the case with shopaholics or excessive gamblers, the truth is that, with help, it is still possible to maintain control over one’s personal portfolio. Simply, a person must recognize that they have a problem, that this problem is a threat to their future and that correcting the problem is fully within their control.

Debt Education is the Answer

Once a problem is realized, a person can then begin to take steps to repair their personal finance debt by becoming educated on financial topics. More than ever before, access to financial education topics are readily available to everyone. From personal finance budget software, to local community classes, to library books written by respected authors, a full financial education is within everyone’s grasp and most resources are free of charge. Keeping this in mind, a great place to start one’s financial education is with the basics of understanding how to create a personal finance debt budget and to understand how credit works. This can be learned by combing the Internet and reading various articles written on the subject or books can be checked out from the library to gain a basic understanding.

Low-Cost Debt Counseling is Also Available

Also, several non-profit organizations offer low-cost debt counseling services. Contacting one’s local Chamber of Commerce or related public agency can help locate such services. In doing so, a debt counselor can help with creating a budget, consolidating outstanding bills and offer further resources helpful to one who is determined to regain control over their personal finance debt.

No More Excuses

No matter how a person learned to mismanage personal finance, debt or credit, there is no excuse for this type of behavior to continue. Nor is there any reason for such economic woes to be passed on to future generations. Instead, a person who is truly interested in correcting bad habits and living a stress-free financial life, will take this advice to heart and begin, immediately, to learn all there is to learn about handling their finances more responsibly.

Scaling Back can have Advantages

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A recent article on USNews.com tells the story of one of the many former middle class workers who has lost her job within the last year and has had to find new ways to bring in money now. This is not a sad story though, at least not for the most part. Catherine Goerz once made $8000 a month at her nine to five job. Nowadays, between her unemployment insurance, freelance jobs and odd jobs she now brings in about $1900 a month. She has had to dramatically alter her lifestyle, but despite that, does not relish the idea of going back to her old work schedule. She feels that regardless of the sacrifices, her new lifestyle has forced her to focus on what she really wants in life.

Where to make Cuts

When faced with a new lifestyle that includes a substantially lower income, tough decisions must be made. A person must decide what items he/she can live without and which regular activities can be given up or toned back. Luxury items are usually the first to go and items that must be purchased can often be bought for a lower price. Clothing, for example does not have to come from a boutique or even a department store. When money is tight, necessary clothing items can be found in consignment shops and on online bidding sites, as well as many other discount places. Buying only the essentials can be very freeing and shopping for a bargain can instill lifelong money saving habits.

Of Course, it’s not All Roses

For Catherine Goerz, the new financial situation has not been completely easy. She now lives with three roommates to be able to afford rent. The freedom of living on her own is something that she thinks about often. She has cut back her dinners out and has had to find creative ways to stretch out the food that she buys. Two meals a day is now the norm for her, eating a kind of brunch-time meal and then an early dinner. She eats dinner at a friend’s house once a week and when she goes out with friends she tries to bring half of her food home to eat for another meal or two. A car and house of her own are only pipe dreams for the time being.

Maybe having it All was just too Much

According to Goerz though, even some of her financially well-off friends have started to scale back their spending recently. The frugal trend of those who are low on money now may be catching in America in general. Many people are beginning to realize that they can change aspects of their spending and still have a fulfilling life, perhaps an even more fulfilling one.

A Different Mindset

Changing your financial perspective can open up a range of new possibilities. It can allow you to see opportunities and ways of doing things that you previously did not realize existed. If you are currently living on less money now than you were used to having, try to think creatively to find new ways you can enjoy life. Your new lifestyle may create lasting positive changes in your life.

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Getting Down to Business

If you are low on money now you are not alone. There are many families who are struggling to make ends meet these days. One thing that can help, if you have not done this already, is to create a family budget. Unless your kids are small, getting everyone together in one place is an important first step. If older children are spending part of the family income then they really need to be part of the discussion. It is important that everyone understands the new spending habits and the importance of the decisions.

Write it Down

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The first thing you need to do when you decide to create a family budget is to begin tracking all of your expenses. Keep track of every little thing that each family member spends. You will also need to keep close tabs on the amount of money coming in from all sources too. For household bills you will need to add up a year’s worth and average them out to a monthly cost. These details are important because they are the building blocks of your budget.

Time to Reconvene and Crunch some Numbers

Now that you have the basics written down it is time to bring the family back together to discuss the findings. This is the time to determine which expenses are necessary and which you can go without. Obviously there are some essentials that cannot be eliminated such as rent/mortgage, utilities, food basics, etc. Those expenses must be marked down first. Then it is time to examine the rest of the areas where money is being spent. Clearly, if the family is short on money now there are some expenses that must go, at least for the time being. Ensure that each member of the family understands this and that the budget is for the overall good of the family. Each family member should be given a chance at this time to explain why they feel certain purchases are important.

Try to Think Creatively

Of course there are some items that are essential, but sometimes there can be modifications made to even these costs. Food is clearly a necessity, but can often be altered to fit a budget. For instance, if family members are buying meals while they are away at school or work they can start to pack lunches to take with them. If the family has frequent dinners out or order in regularly, switching to preparing meals at home can save a lot of money. If anyone in the family has a coffee shop addiction you can buy a few inexpensive items to make special coffees at home, such as a French press, frother and flavoring syrup. With utilities money can still be saved by making sure everyone is turning off lights when they leave a room, taking shorter showers, washing clothes in cold water and other such energy saving ideas.

Make Cuts, but Don’t Cut too Deep

Try to free up enough money now so that you can put at least a little away and, if you have debt, put some towards that each month too. Try to leave a bit of room for some fun too. Maybe factor in one dinner out a month or a family pizza night. Often times people give up on their budgets because they make them too restrictive.

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Plan ahead to save money on groceries.

For many people, going grocery shopping can be a bit of a chore and it becomes an even more unpleasant experience when pay day is far off. You want to get as much as you can for the least amount of money, especially if you are buying for a family.

Sure, you could get by eating boxed mac and cheese and hot dogs, but unless you are a college student, the old metabolism is probably not going to tolerate that for very long. So what are the best ways to stretch your grocery dollars?

The Tried and True

For years, people have been clipping coupons to save on various household items. It seems this trend has inexplicably become less common in recent years. Cutting coupons is a great way to save money on groceries.

Stores are banking on the fact that few people will take the time to clip coupons or that they will not remember to use them once they get into the store. If you do use them though, you can save a bundle, especially if you live near a store that offers double coupon days or similar incentives.

A Modern Twist on the Tried and True

A more recent idea that offers similar discounts to coupons is the store discount card. Some stores offer a free card that shoppers can sign up for and use each time they shop in the store. This is not to be confused with a store credit card, which can eat up your pay day money before you get it. The store discount card offers a sale price on certain items only to card holders. Again, in this way the store does not have to offer the discount to everyone, but if you have signed up for one you get the lower price.

Always Plan Ahead

Watch your local fliers and make a list for each store. Try to plan your meals for the week using as many of the sale items as possible. Also, organizing your trip ahead of time and checking off items on your list can save on fuel, as you will take the most direct route and avoid extra trips for missed items.

Choose Wisely to Save Even More

Planning meals that use a lot of vegetables, such as stir-fries and soups can save a lot of money, and they’re healthy, too. You can also add some rice or pasta for not much more and, if you want to buy a small piece of meat, it can go a long way in these kinds of meals. Another way to save in the grocery store is to buy no-name or store brand items. Many of these products are made in the same factories, as the store brand items and are basically the same, without the high price tag.

A Little More Planning and a Lot Less Stress

By spending a bit more time comparing prices and planning out your meals and shopping ahead of time, there is a great deal of money to be saved. Follow these tips and the wait until pay day may not seem quite so long.

Making your own liquer is easy, and it makes great holiday gifts. Image from Flickr.

This is the time of year for giving, but with the current economy you may be short on cash now. Exchanging gifts can be a fun and exciting part of the holiday season, but can also be a source of stress and worry. There is the hassle of figuring out what to buy, coupled with the anxiety over cost.

Particularly during these tough financial times, stretching the budget to buy presents can be a challenge. Fortunately, with a little creativity and exploration, the undertaking can be a lot more enjoyable and pocket friendly.

Get some Inspiration

For those having trouble with finding the right gift, there are a few places to turn. Whether you are intending to shop in stores or online, a great place to get ideas is on gift sites. Two helpful ones are gifts.com and findgift.com. These sites offer gift suggestions based on information you provide about the recipient.

On gifts.com you can take a quiz that narrows possible gifts by gender, age and personality traits. Additionally, you can choose from pre-sorted groupings of gifts to browse through. Findgift.com offers a similar questionnaire, but also takes the occasion and person’s relationship to you into account. These sites both offer the option of purchasing the gifts through online, but they are also great sources of ideas for present shopping in general.

Now how about a Great Deal

If you already have an idea of what to buy and do not mind shopping online, eBay can be a great resource. It is free to sign up for an account and can be a great way to get an amazing deal on a hot product. Besides, you do not have to spend hours sifting through products that you do not want. EBay allows you to narrow your search by several different factors, giving you the ability to eliminate items that do not meet your specifications.

When searching for gifts, it is often a good idea to remove the used items from the search, unless you are looking for antique or vintage piece. If you are short on time, it can help to keep the search to results within your own country so that the mailing time will be shorter, and if you are extra low on cash now, sort your results from low cost to high and start looking at the top of the list.

Gifts from the Heart that Go Straight to the Thighs

Getting in touch with your crafty side can be another option for those looking to save some cash now over the holidays. Indulging in decadent sweets is a regular part of the season. Instead of baking a bunch of different kinds of cookies, why not become the ultimate resource for one kind of indulgence?

Become the definitive fudge or toffee maker. Create to-die-for truffles or caramel corn. Whatever your choice, find a fantastic recipe and concentrate on making it well. Next, package it up in bags or boxes tied with festive ribbon, and you have great gifts. The best part is that the packages need not be very big because of the richness of the treats.

Another idea is to create a signature liqueur. Recipes can be found online and are relatively easy to make. Pour your creation into bottles and add ribbons and tags and they are ready to give. On the other hand, if your recipient is artsy, but you are woefully uncreative you can check out a wide array of inspired items at a great price on Etsy.com.

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Learn how you can organize your bills so that they seem less of chore and more of an achievement.

You see them every day, and you hate to open them. What more exciting news could they possibly bring than reminding you of your obligation? Don’t they realize there is a recession going on? Do they think you have extra cash lying around? Rather than looking at them like the 800-pound ogre that won’t go away, begin organizing bills by priority and take a conquering approach to them.

According to psychologist Maslow’s hierarchy of needs, the first thing you have to satisfy are physiological needs such as food, shelter and breathing. This is generally a good guideline to follow, but you don’t have to exactly stick to it to the T as you’re organizing which bills to pay first. You may want to consider this recommendation.

Keep a Roof Over Your Head

As you’re leafing through those dreaded envelopes, organizing the bills in order of least ulcer-inducing, remember first that you’ve got avoid sleeping under a bridge. Mortgages may be the biggest pain because they are the largest payment, but if you consistently miss paying that bill, then be prepared to pitch your tent underneath the nearest overpass. Okay, perhaps that’s a bit harsh. At least consider that you have to first take care of your physical needs.

Got to Get Around

The second priority in organizing your bills is making your car payment. Unless you live in a city and have daily access to fast public transport, you need be able to get to and from work or to that next job fair. In the United States, Canada and other spread out societies, you can’t really go too far without wheels. We are highly dependent on cars to perform day-to-day functions.

Health Insurance

Despite this being under large debate in the government, health care is not something to gamble with. Swine flu, cancer treatments, disability-related injuries, obesity and stress-related symptoms have all affected physical and mental health in some form or another, especially in this economy. You need to be able to see the doctor whenever necessary. Don’t leave your health to chance and whimsy.

Who’s On First

Pay the bill that has the earlier date. You might have thought this would be the first criterion in paying bills, but you have to consider your personal needs as you’re organizing. Can you afford a negative balance in your checking account until payday rolls around the next week? Or can you afford to lose your house for a month as you maintain a positive balance in your checking account? Once you meet your physical needs, then you can take on the pesky bill that knocks early at your door.

Highest Percentage Credit Cards

Paying off high interest-rate credit cards is emphasized time and again by financial experts for good reason. Missing these payments on a consistent basis just piles on unnecessary fees. Remember that you are paying a penalty for being late. If you show up late to a meeting, you get a stern look. If you’re late with a promised card payment, you’re slapped with an added cost you don’t need right now. Some credit cards are a lot harsher about your delinquency than others by how high they charge you.

image by flickr

Payday loans applications are flourishing as medical costs continue to weigh down Americans.  Currently there are millions of people seeking aid from government programs.  These programs can be confusing, however, and many people are being rejected for innocuous reasons such as location, rather than need.   Government aid comes in the form of health care, housing aid, and food stamps. But each one comes with its own set of rules and regulations to be eligible, and truly needy people can get caught in the red-tape.

Beverly Johnson of Kosciusko, Mississippi lost her job at a Bible college. When she went to apply for unemployment, she was told that as an employee of a religious school she was ineligible.  “That was a shock,” she said.  Most Americans believe that unemployment is there if they are let go but there are underlying rules with every government program.

Because there is so much fine-print when it comes to getting government assistance, payday loans are filling the gap.  When people need money, they look to payday loans as a reliable option because other options are so uncertain.  Martin Summerstein of Miami, Florida stated, “We use payday loans because they are available to us. You can’t count on the government, because one day help is there and the next it isn’t.”

Studies show

The New York Times did a study of state enrollment for six federal assistance programs and found a huge amount of disparity between them.  In California, only 50 percent of people who need food stamps get them, whereas in Missouri almost 98 percent of people get them.  In South Dakota, 19 percent of unemployed people get unemployment benefits, while Idaho gives benefits to 67 percent of its out of work citizens.

Political scientist at Harvard Theda Skocpol stated, “The system for helping Americans in need is very fragmented, and it confuses everyone. Some people are covered, and some people are not, even though they look like they’re in very similar circumstances,” says the New York Times.

The critics

The stimulus package has about $100 billion in safety net provisions but each state is able to decide whether or not to take advantage of it.  A few governors believe that to increase unemployment benefits would increase taxes on businesses and cut down on new job creation.  They rejected the assistance.

Some critics believe that this extra fund is detrimental.  They cited that payday loans and easily available federal aid can cause people to mismanage their budgets consistently.  “If people have options, they won’t be forced to rework their budgets and cut back where they need to. They can become dependent on extra money instead of being responsible.”  Stuart Butler of the Heritage Foundation believes that added government aid could also discourage people from seeking more education and better paying jobs.

Much-needed reform

In the end, President Obama has a lot to sort through.  His team has to react to the crisis and find ways of including needy people in government aid programs, without driving the economy deeper into a recession.

Shiela Zedlewski, of the Urban Institute, said “We have people (receiving all benefits) but we have far more people who get nothing. … A significant group remains outside the safety net.”  In the meantime, people are trying their best to use payday loans, family assistance and the government programs they are eligible for to stay afloat.  Hopefully, the president will be able to include help for everyone based on need and not on whether they find their way through red-tape.

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