How to prepare for the next government shutdown

Financial planner Arthur Stein will discuss what you can do to protect your assets in the event of another government shutdown, and Sean Reilly will talk about ...

October 23, 2013 — This week on “Your Turn”, financial planner Arthur Stein will talk about ways to prepare yourself for another shutdown or financial emergency.

Here’s his checklist:

Two ways to prepare for a government shutdown (or other financial emergency) are an emergency fund and low debt.

I used to recommend smaller emergency funds for federal employees than my private-sector clients because they had great job security. That job security doesn’t look as secure as it used to.

Reasons job security looks weaker:

  • Sequester gets worse next year
  • There could be another shutdown
  • 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.

Listen if you can (1500 AM or online), and if you have questions email Mike at or call in during the show at (202) 465-3080. The show will be archived here.

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