There is a strong push by Republicans to reduce the size of the federal government, which could result in layoffs.
For many of my federal clients, I used to recommend an emergency fund equal to three-to-six months of living expenses. Now, six-to-12 months of living expenses may be more appropriate.
In order to help generate additional emergency funds
Stop making additional payments on your mortgage;
Reduce TSP contributions (but not below 5%);
For non-retirement mutual funds, stop reinvesting dividends and capital gains;
Sell some taxable investments to generate the remainder of the money. That will entail capital gains tax.
Low debt is a good idea regardless of job security. However, low debt doesn’t mean no debt. A mortgage on your house can be beneficial in many ways.
Credit card debt is a warning sign that you are not doing well. You never want to have credit card debt.
One-to-three-year car loans are OK. Car loans lasting four years or more indicate that you are buying a car that you cannot afford.
Later in the show, Federal Times senior writer Sean Reilly and I will talk about the prospects for another shutdown, what Congress may next do to federal workers and the state of the U.S. Postal Service.