The Government Shutdown & How To Be Sure Your Financial Plan Keeps Working
THE BIG THING I WANT YOU TO KNOW:
There are lessons to be learned from the government shutdown and what it means for YOU and your finances. Let’s look at the ways you can actually be prepared for life’s unexpected circumstances. (And in today’s world it’s essential you’re ready.)
The longest government shutdown in history is over — sort of
After a THREE WEEK LONG stalemate, the government shutdown hit a fever pitch and the FAA announced it grounded planes at airports because not enough employees were at work on Friday morning. About four hours later, President Trump announced that the government shutdown had been lifted for the next three weeks.
Quick Side Note: If you’re subscribed to our daily updates you’ve seen how fired up I’ve been about this shutdown and the complete lack of empathy our political leaders have expressed. Coming out of the most expensive time of year and starting the new year without a paycheck isn’t easy. #PreachingOver
Friends, there is no ignoring that politics and finances are inextricably related and we can all takeaway vital lessons from this government shutdown.
The political dialogue in our country is directly related to our daily financial dialogue.
3 Steps to Become Financially Prepared for Whatever Happens “Next” in our nation
In theory, Washington has three weeks to figure out border security in a way that appeases both sides or else we’re right back to square one.
It’s my guess (and hope!) that we don’t see another shutdown because I don’t think Americans have the appetite for one, but one thing’s for certain: federal employees aren’t the only people who should prepare for another economic downturn.
What would happen if your household was down one or two paychecks due to a layoff, downsizing, merger, shutdown, slow business season, you name it? Here’s what to do today to be prepared for anything that could happen in life
1 - Build Your 3-month Emergency Fund.
Get your emergency fund going. If you’ve listened to the show, I may sound like a broken record, but when you need cash after an expected event like forced furlough or job loss, an investment property or money in a 401k isn’t at your fingertips. This is essential.
If saving three months of worth of expenses feels like a tall order, start small and stock away whatever money you can. You need to pay yourself FIRST. Pause everything you can until you have this nest egg in place. Curb your caffeine fix, cancel that wonderful streaming subscription and stop making retirement contributions (Yes, I mean it and feel free to forward irate calls from your HR department to me) until you have what you need.
2 - get liquid with it.
I want you to fully fund one year’s worth of a r ROTH IRA contribution ($5,500). A Roth IRA is an individual retirement account, but unlike your 401(k) it is funded with after-tax dollars. So you have to pay taxes on the money you put in this year, but then it grows tax-free…forever.
… And no tax is owed on money you pull out of it in retirement!
There are numerous advantages to this strategy, but in dire cases your money is best when it’s liquid and not tangled up in assets or investments.
3 - IN Local banks we trust!
Now, that it’s time to save, invest, and find yourself a trustworthy banker. Lots of community and regional banks and credit unions played their part in helping furloughed government workers secure low-interest or no-interest loans during the shutdown to help make ends meet.
However, the big guns were noticeably absent. Bank of America, Wells Fargo, Chase and Sun Trust — none of them stepped in to help ease the burden. Big banks made record profits in 2018, but they didn’t offer any of that money back to customers. Think about who you want in your corner when things get tough.
The goal in planning is to assume the worst, but plan for the best.
And So Life Continues on…
If you read something you don’t agree with, made you think twice, or gave you some reason to question your own personal situations — we would be happy to offer professional input. Listen, we’re not really sure what turn the government is going to take, but we will be here to talk you through your options and assess what’s best for you.
We believe in building financial plans that are built for life.
The government might be temporarily open, but Dynamic Money is always open for business. And with that plug, we will follow it with another plug: Don’t forget to follow us on Instagram, Facebook and Subscribe to our Podcast. #SocialThings
If your job ended tomorrow, what what would your next career move be?