Sequestration Explained: Five ways the sequester could impact you

I'm going to go ahead and assume that you've at least heard the term "sequestration" at least once over the past few weeks. 

And if you're anything like me, you may have heard it and thought to yourself:

"Wait a minute — did he just say Seacrest Nation? Why does everyone care so much about Ryan Seacrest?!?!..."

Once you realized that sequestration, in fact, has absolutley nothing to do with Ryan Seacrest, you probably started thinking, "Ok, but how will this sequester thing affect ME?"

What exactly is sequestration?

If you’ve heard the term before, it’s likely been in the context of a court case (or on an episode of Law and Order).

Technically, the term means to “remove or withdraw.” And that’s the purpose of sequestration as is stands in this case.

When Congress approved the increase in the national debt ceiling, there were conditions put in place to ensure we wouldn't default on our loans. So essentially, the $1.2 trillion in federal cuts over the next 10 years is the government’s way to “remove” (or “sequester”) some of the funds that had initially been released.

How does it affect me?

Because these automatic cuts are across the board, there will likely be a number of significant implications. However, it's not immediately clear what kind of impact sequestration will have on the average American.

That said, the White House did release an outline of potential consequences of sequestration — and they're not pretty. The following are six key areas that have potential to have widespread impact:

  1. Education programs will take a big hit — from programs like Head Start to special education (IDEA). More than 31,000 teachers and teachers’ aides could be laid off.
  2. FEMA could see its budget cut by as much as $1 billion — which would affect the response-to and recovery-from natural disasters like Hurricane Sandy.
  3. U.S. Department of Agriculture furloughs and layoffs would mean fewer inspections at food processing plants. In addition, about 600,000 women and children would be dropped from the WIC (Women, Infants, and Children) nutrition program.
  4. Law enforcement agencies, including the FBI and Border Patrol, would lose more than 1,000 agents.
  5. Emergency Unemployment Compensation benefits could be cut by as much as 9.4 percent. And if the proposed cuts take effect, the Congressional Budget Office estimates 1.4 million jobs will be lost.

While we certainly hope there's a quick resolution to the sequestration dilemma, it's important — especially when it comes to your money — that you prepare for the worst-case scenario. Whether it’s setting up an emergency savings account or taking control of your debt NOW in order to lessen the blow LATER — there are steps you can take today.

We know that it's always easier said than done, which is why we're here to help! We have the resources, tools and experts available to help you create your very own financial survival kit. So start exploring, or give us a call at 866.412.2227 to learn more about how your finances will benefit from our services.  


Are you worried about sequestration? What is your biggest concern when it comes to budget cuts? Share your thoughts by commenting on this post!


Related posts:

Recovering from job loss: Linda's story

Avoid hitting your personal debt ceiling   

How to save money when you're in debt 

Poll shows most do not have money available for unplanned expenses

Jessica Horton is a former copywriter and community manager at MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.