Greece Votes No

As a rule, I don't post often about politics.  But, this is a world event which I feel that we need to look at more closely.  There are some cautionary tales here for us, and we would do well to heed them.

To recap:

Greece has been attempting to pay back billions of dollars in debt over the last few years.  Austerity measures have been put in place in order to raise the money to pay back the loans.

Last week, Greece missed their payment to the International Monetary Fund (IMF) and became the first developed nation in the world to default on a loan.

Yesterday, a referendum was held, and the People of Greece voted to reject the proposal put forth by the European Union for a bailout.

Withdrawals at ATM's have been limited to 60 Euros a day (about $67, US), and there are fears that all cash will soon disappear.  Banks have been closed for over a week.

What the average Greek is seeing:

Many stores are no longer accepting credit or debit cards.

No cash.

Food, gas, and other items are disappearing off of the shelves.

Our lesson:

Two years ago, our government played a crazy game of blink.  Remember the Sequester cuts and the government furloughs?  This was a battle over our debt payments and cutting budget spending.

Husband and I were directly impacted by the furloughs.  I was substitute teaching at the time, and you know, that really doesn't bring in a lot of money.  Definitely not enough to cover the mortgage payment.  It was enough to cover gas so that I could get back and forth to work.

For a month, we lived off of the food we had on our pantry shelves and in our freezer.  To make it fun, we called those meals "What Was That?"  I would pull some random, unlabeled freezer bag out of the freezer, thaw it out, and make it into dinner.  (I've since gotten much better at labeling.  Now I KNOW what THAT was!)

Creditors really don't care that you don't have an income coming in.  They want their money.  We had been paying ahead on our mortgage and asked the mortgage company if we could not pay until the furloughs were over.  (We were almost a year ahead on the mortgage.)  No dice.  They expected their payments, or they would begin foreclosure proceedings.  Same with the auto insurance.   Auto insurance in mandatory, and I called to ask if we could delay payments by a month.  No dice.  Payment not received by the due date, and we would be cancelled.  Thankfully, the electric company was willing to skip a month payment, and due to the furloughs, they agreed not to charge us a late fee.  The credit card companies were more than happy to help - "No payment, no problem.  Extra fees will be accrued, and interest will be charged on the entire balance."  Also, if we had missed a payment, they were going to raise our interest rates.  AND - they encouraged us to pay our mandatory bills - like the mortgage - with a credit card.  At 19% interest.  YEAH, RIGHT.

Anyway, the furloughs ended, and the sequester ended.  Money started coming in again.  But, we walked away with a couple of hard lessons:

1) Get out of debt. 
Not just the credit cards, but the house, and auto loans.  We've got a couple of credit card balances we're paying down, but after the furloughs, we agreed that getting the house paid off was a priority.  We need to own our house outright.  What if the furloughs had gone on for another month?  Would we have lost our house? 

2) Always keep a little food on hand. 
I enjoy canning and freezing.  We always have a full freezer.  We are fortunate in that we are able to stock up on items when they are on sale.  Because of the furloughs, I found that I had a solid six weeks of food in the house.  I was so glad to know that was one thing I didn't have to worry about.  This morning, I was looking at pictures of empty grocery shelves throughout Greece.

3) Have some cash in savings.
The "experts" recommend having a 3 to 6 month supply of cash on hand.  We had enough to cover one month of mortgage payments.  Honestly, I don't know if this would help if we were to be in a situation like Greece.  I've heard conflicting reports about their ability to access banks electronically and pay their bills online.  I've heard nothing that I'd be willing to quote as reliable one way or another about this.  Either way, I think having some cash in savings is a good idea.  If you lose a job, a car breaks down, or the house needs a new roof, you don't have to fall back on a credit card.


I'm sure there are some larger life lessons going on here that we will all see played out over the next few weeks.  Everyone should be paying very close attention to what is going on in Greece.

Sources:

http://www.bbc.com/news/world-europe-33406001

http://www.ibtimes.com/greek-referendum-live-results-update-no-vote-set-win-61-says-greek-interior-minister-1996182

http://www.sfgate.com/news/world/article/Greece-still-cash-starved-after-decisive-no-6367753.php

http://news.yahoo.com/sugar-flour-rice-panicked-greeks-stock-essentials-175737930.html