By Alanna Ritchie, content writer, Debt.org
Life can catch you off guard, and while California’s Paid Family Leave Act provides partial wage repayment, it may not cover all the expenses you accrue during the time you are away from work. You could end up surrounded by overwhelming debt.
The cost of providing for yourself, a pregnant family member, a sudden illness or becoming a caregiver is high. It requires more than the legal provisions of job tenure and future financial security. You can protect yourself and your loved ones by avoiding these debt pitfalls.
Forgetting to Create an Emergency Fund
Don’t wait until emergencies strike to see if you have enough money to squeeze by. A good provider is always ready for unexpected situations, such a becoming sick or pregnant.
Financial experts recommend setting up an emergency fund with a starting balance of $1,000. Once you meet that goal, work toward having three to six months of living expenses set aside.
These savings will help cover the gap of lost income for the time you miss work. The more you save, the better position you’ll be in to cover medical expenses that will likely exceed your normal monthly budget.
Relying on Credit
Without an emergency fund, people who are financially stressed often make the mistake of relying on credit cards. After a few months, they find themselves quickly immersed in credit card debt.
The accumulation of credit card debt begins with groceries, gas and small expenditures. It can quickly escalate when you start using credit cards to make payments for cell phone bills, insurance and rent.
Depending on credit cards to supplement your income might seem like a short-term solution to making payments, especially if you expect your family leave to be.
Unfortunately, by the time you return to work, you may find that your income no longer covers monthly payments. You’ll also start paying interest on the balance, making financial recovery a difficult and long-term process.
Remember that skipping payments for a long period of time, without a plan to crawl out of debt, is a costly mistake you want to avoid.
Whether it’s credit card debt or a loan you are trying to pay off, there are some situations where you simply cannot make ends meet.
These types of debt circumstances can debilitate you, but there are options. Do research about qualifying for debt settlement or loan consolidation programs — which can offer you more time to pay off debt, and in some cases, reduce the overall amount you owe.
Make a decision on the program that works for you.
Staying out of debt can be incredibly difficult, especially when the well-being of your family is on the line.
You can regain control of your finances by putting together an emergency fund, avoiding a dependency on credit cards, missing payments and other dangerous habits. While we cannot plan when emergency will strike or its effect on our families, we can take measures to always be prepared.
Alanna Ritchie writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.
Contributed by Julia Parish, an attorney at the Legal Aid Society – Employment Law Center.
Sally, a 74-year old woman and longtime employee of a large national retail store, recently contacted The Legal Aid Society – Employment Law Center (Legal Aid) for help. Sally’s twin sister was diagnosed with terminal cancer. Her sister is widowed, their parents are deceased, and her only child lives out of state and is unable to help with her care. The twin sisters have lived together for 15 years and Sally wants her twin to have the dignity of dying at home. But Sally can’t receive Paid Family Leave because siblings are not currently included in the law’s definition of family. She can’t afford to take unpaid time off, so she has been working nights in order to care for her sister during the day.
In 2004, California became the first state in the nation to implement a comprehensive Paid Family Leave (PFL) insurance program. PFL is funded entirely by workers through paycheck deductions and provides up to six weeks of partial wage replacement to workers who must take time off to care for a seriously ill parent, child, spouse or registered domestic partner, or bond with their new child – making a leave of absence a practical possibility for working families, especially for low wage workers who depend on every paycheck to make ends meet.
However, families are diverse – and so are caregiving responsibilities. At Legal Aid, we hear from many workers who are the only people available to care for their seriously ill siblings, in-laws, grandparents and grandchildren, yet they cannot receive PFL because these close family members are excluded from the program. SB 770, introduced by Senator Hannah-Beth Jackson (D-Santa Barbara), would allow workers to receive Paid Family Leave benefits while caring for seriously ill grandparents, grandchildren, siblings, and parents-in-law.
The narrow definition of family in PFL fails to account for the diversity of California households and the importance of caregiving by other close family members. California has the second highest percentage of multi-generational households in the country. Nearly half of Californians are single, and their closest relative may be a sibling. In a recent study of caregivers of Alzheimer’s patients, over 40 percent of caregivers were not covered under the narrow definition of family in California’s Paid Family Leave law.
FL also benefits California businesses. According to a 2011 study, Leaves That Pay: Employer and Worker Experiences with Paid Family Leave in California, the vast majority of employers reported that PFL had either a positive or no noticeable effect on business profitability, productivity and employee morale. Small businesses were less likely to report any negative effects than large employers.
No one should have to choose between receiving a paycheck and caring for a loved one in a medical crisis. By expanding the PFL program to include caregiving for seriously ill siblings, grandparents, grandchildren and parents-in-law, SB 770 will ensure that California workers can care for close family members without jeopardizing their economic well-being and will better reflect the reality and diversity of California families.
Workers with questions about their right to leave from work can call Legal Aid Society – Employment Law Center’s Work & Family toll-free helpline at (800) 880-8047 or (415) 593-0033.
By Jenya Cassidy
Great news! The California Work & Family Coalition has a new home. We will be joining the offices of Next Generation in San Francisco. Next Generation is a national non-profit that promotes solutions to the biggest threats facing us: climate change and the growing economic uncertainty that diminishes prospects for children and families. With Next Generation, we will continue our work expanding all Californians’ access to family leave, paid sick days, and other benefits important to working families. This new partnership will provide broader opportunities for both groups to create positive change, both in California and as part of the growing national movement to improve the economic security of children and families.
Since helping pass the country’s first Paid Family Leave law in 2002, the California Work and Family Coalition has continued to advance legislative campaigns to improve and expand California workers’ rights to put family first. In 2011, we passed SB 299 — a law that protects pregnant women from losing their health benefits while on leave. And for the past few years, we have been building momentum behind campaigns to win paid sick days for all workers, expand family leave rights to additional family members and enhance the rights of parents and caregivers in the workplace. With Next Generation, we will have the opportunity to engage new partners in this important work.
In addition to advocating for new legislation, the Coalition has become the go-to source of information on existing California leave laws. Our Paid Family Leave website, Family Leave Laws booklet, and Six Key Laws poster are in high demand. Our Know Your Rights training has been an effective way to educate and involve community leaders and advocates in our statewide work. Since recent studies show that low- income workers are less likely to be aware of Paid Family Leave, we know that passing a law is just the first step. That’s why improved implementation and public education around existing law are fundamental goals of each Coalition member organization. We will have an even greater capacity to continue our education and leadership building with Next Generation. Creating and strengthening an informed, vocal constituency for family leave rights is our most important work.
California is unique ….We have stronger family leave laws than many states, but we also have a greater need. California has the highest poverty rate due to the high cost of living – especially in its cities. Many Californians work more than one job just to make ends meet. We have the highest rate of multiple generations living under one roof, and these workers benefit greatly when paid family leave and family leave rights are expanded. We are excited that with Next Generation, we can build a movement in California that responds to the particular needs of our state while playing a role in the national movement for paid sick days and family leave rights.