Monthly Archives: October 2013

Why Don’t All Affluent People Become Wealthy?

Why Don’t All Affluent People Become Wealthy?
Perception, hesitation & poor decisions are factors.

IMG_20130429_153125Design 23

By GREG OLIVER

Why do some people let their potential for lifetime wealth slip away? Some people are better off economically at 30 or 40 than they are at 50 or 60. In some cases, fate deals them a bad hand. In other cases, bad decisions and inaction are to blame.

They buy depreciating assets, instead of allowing assets to appreciate. In 2012, a Federal Reserve Survey of Consumer Finances noted that only 52% of American households earn more money than they spend. They rack up debt and live on margin. What are they spending so much on? It isn’t just consumer staples – it’s not unusual for a family to “keep up with the Joneses” and buy the latest nonessential items.1

Contrary to the bumper sticker, he who dies with the most toys does not necessarily win, and he may leave a pile of debt and little savings behind. Today’s hottest cars, clothes, flat-screens, phones and tablets may be tomorrow’s discards.

They never contribute to an IRA or qualified retirement plan. For all the flak directed recently at workplace retirement plans and IRAs, they still provide a tremendous opportunity to save and invest. They are tax-advantaged, which contributes to greater compounding of the assets within them. With a Roth IRA, qualified withdrawals are tax-free for the original owner.2

They never build up an emergency fund. Financial challenges will arise, and a rainy-day fund can help you meet them. Even the wealthy need cash reserves. Striving to save for that rainy day also helps to promote good lifelong saving habits.

They never seek to own. Who gets rich by renting? Ownership of real property or a business comes with its headaches, but it may also leave a middle class or working class individual much wealthier over time.

They invest without a strategy. Chasing the return at any cost, impulsive stock picking and market timing – these are behaviors that may lead to frustration instead of financial freedom. Clichés become clichés because they are true, and the financial cliché of “get rich slowly” has proved true for many. Instant wealth seldom comes from picking a hot stock or fund; indeed, that wealth may be fleeting. These truths don’t stop people from “putting it all on black” – hazardously assigning an excessive portion of their assets to one investment or market sector.

They accept a “forever middle class” mindset. Some people define themselves as middle class and accept that definition all their lives. The danger is that this can amount to a kind of psychological barrier, a sense that “this is it” and that “getting rich” is for others.

With all the dire articles out there about the diminishing middle class in America, the fact is that upward mobility is much more common here than in many other nations. Yet in this land of opportunity, people have some intriguing perceptions about the middle class.

Last year, the Pew Research Center conducted a poll of 2,508 American adults which had some interesting results. Only 48% of those earning at least $100,000 identified as upper class or upper-middle class. Amazingly, 6% of respondents at that income level actually felt that they were lower class or at least lower-middle class. Additionally, 18% of those with incomes from $50,000-99,000 identified themselves as lower class or lower-middle class, though 65% (correctly) believed they were middle class.3

The poll also asked how much money a family of four would need to live a middle class lifestyle. Answers to that question varied by income bracket: while the median response across the poll was a reasonable $70,000, respondents with family incomes of at least $100,000 gave a median response of $100,000, while families earning less than $30,000 said $40,000 would do.3

Behavior & belief may count as much as effort. It takes some initiative to create lifetime wealth from present-day affluence, but a person’s outlook on money (and view of the purpose of money) can influence that effort – for better or worse.

oliver ., greg 89668767865785765675ohio

Citations.
1 – business.time.com/2012/10/23/is-the-u-s-waging-a-war-on-savers/ [10/23/12]
2 – schwab.com/public/schwab/resource_center/expert_insight/retirement_strategies/planning/saving_for_retirement_ira_vs_401k.html [10/10/12]
3 – economix.blogs.nytimes.com/2012/08/23/who-counts-as-middle-class/ [8/23/12]

2013: A Third Quarter Review

A quick summary of economies & markets for you.
BY GREG OLIVER

Design 23

U.S. stocks “ rollercoastered ” in Q3 2013, but the S&P 500 ultimately gained 4.69% in three months and celebrated another record close on September 18 (1,725.52). The Federal Reserve refrained from tapering its stimulus effort, a move cheered in financial markets worldwide. Global investors sighed with relief as diplomacy headed off a major geopolitical crisis in Syria, and sighed with frustration as bipartisan sparring threatened to shut down parts of the U.S. government and threaten its ability to pay debt. Assumptions of higher mortgage rates didn’t exactly reduce demand for homes; foreign stock benchmarks rose, and so did prices of precious metals.1,2

Domestic economic health. Mirroring Q3 2012, the big economic move of Q3 2013 came in mid-September. A year after rolling out QE3, the Fed unexpectedly announced it would hold off on reducing the amount of its monthly bond purchases. Fed chairman Ben Bernanke mentioned that the central bank could be open to a taper later in the year; Kansas City Fed president James Bullard thought it might happen in October.3,4

Turning from Wall Street to Main Street, the jobless rate fell to 7.3% in August, down 0.3% from June and down 0.8% in 12 months. Even so, 37.9% of those unemployed in August had been out of work for 27 weeks or longer. Consumer inflation – as gauged by the headline Consumer Price Index – was minor, increasing 0.2% in July and 0.1% in August. The University of Michigan’s consumer sentiment index hit a 6-year peak of 85.1 in July, but slipped to 82.1 in August and 77.5 in September. In June, the Conference Board’s consumer confidence index was at 82.1, the highest in 5½ years; in August, it was 81.8, but in September it fell to 79.7.5,6,7,8

Consumer spending increased 0.2% for July and 0.3% for August; consumer incomes increased 0.2% and 0.4% in those respective months. Retail sales figures were similarly decent: up 0.4% in July, 0.2% for August. In September, the Bureau of Economic Analysis made its final estimate of Q2 GDP – 2.5%.9,10

On the factory front, the Institute for Supply Management’s manufacturing PMI chronicled a healthy expansion during the quarter, averaging 55.8 (55.4 in July, 55.7 in August, and 56.2 in September). ISM’s non-manufacturing index also reached impressive heights, coming in at 56.0 in July and 58.6 in August. Overall hard goods orders slid 8.1% in July, but managed a 0.1% gain in August; minus transportation orders, they fell 0.5% in July and 0.1% in August. The Producer Price Index settled: after June’s 0.8% rise, it was flat for July and up 0.3% in August, when annualized wholesale inflation was running at 1.4%.9,11,12,13

Wall Street and Main Street tracked many other news developments in the quarter. In July, the Obama administration chose to delay one part of the implementation of the Affordable Care Act; the requirement for businesses with 50 or more employees to furnish health insurance plans was pushed back until 2015. Still, online health care exchanges for uninsured individuals opened on October 1 as scheduled. In August, President Obama called for the phase-out of Fannie Mae and Freddie Mac, proposing to replace them with a new system reliant on private sector purchases of mortgages from lenders, with private capital bearing the bulk of any losses. The quarter ended with a partial shutdown of the federal government looming due to an impasse over the federal budget – a partisan dispute that resulted in the first such shutdown since late 1995.14,15,16
Global economic health. When Secretary of State John Kerry stated that Syria’s government had used chemical weapons against its own people in late August, the threat of American military intervention in the conflict between rebels and pro-Assad forces rocked global stock, bond and commodity markets. President Obama said the U.S. would only intervene with the approval of Congress; before that vote could take place, Russia offered a plan to disarm Syria’s chemical weapons stockpiles, one the U.S. accepted. While that conflict eased, global investors certainly had plenty of other headlines to consider.17,18,19

Manufacturing growth appeared to be sputtering in both China and India. HSBC’s factory sector PMI for China was but 50.2 in August, and 50.1 in July. India’s HSBC PMI was 49.6 in August; it had been 48.5 in July. The Asia Development Bank estimated China’s 2013 GDP would be 7.6%, and India’s just 4.7%.20,21

In better news, the eurozone recession was over: its economy had grown for the second straight quarter in Q2 (0.3%), albeit with the euro area jobless rate averaging 12.0% by August. Unfortunately, Italy’s fractious coalition government threatened to come undone at the end of Q3 when five ministers belonging to former prime minister Silvio Berlusconi’s center-right party quit their posts over a tax hike. This left analysts wondering if Italy would face a credit downgrade, and possibly an emergency election.22,23

World markets. Gains were prevalent in the quarter, boosted further by the mid-September announcement that the Fed would not yet taper. Some notable Q3 advances: Shanghai Composite, 9.88%; Hang Seng, 9.89%; Nikkei 225, 5.69%; Asia Dow, 4.33%; Kospi, 7.17%; Europe Dow, 15.56%; STOXX 600, 8.93%; CAC 40, 10.82%; DAX, 7.98%; FTSE 100, 3.97%; TSX Composite, 5,43%; Bovespa, 10.29% … and lapping the field, more or less, Argentina’s MERVAL rose an astonishing 60.73%. Among the big global indices, the Global Dow gained 9.57%, the MSCI World Index 7.68% and the MSCI Emerging Markets Index 5.01%. The Jakarta Composite lost 10.43% in Q3, the IPC All-Share 1.08% and the Sensex 0.08%.1,24

Commodities markets. After a disastrous Q2, precious metals rebounded on the COMEX in Q3: gold gained 8.4%, silver 11.5%, platinum 5.4% and palladium 10.1%. Oil futures rose 6.0% in Q3; natural gas was nearly flat for the quarter, RBOB gasoline lost 3.0%, and heating oil rose 3.9%. This has not been a good year for key crops so far: the worst quarter for corn in 17 years and the worst quarter for soybeans in four put those respective futures at -36.8% and -9.6% YTD. Wheat was down 12.8% YTD at the end of the quarter; at least rice stood at +1.8% YTD.25,26,27,28
Real estate. Existing home sales were still up 1.7% in August, the National Association of Realtors noted, with buyers scrambling to lock in rates after a 6.5% gain for July. New home sales fluctuated – down 14.1% in July, but back up 7.9% a month later. As for new residential construction, it was hard to spot a trend – the Census Bureau reported housing starts up 0.9% in August, and building permits down 3.8% (although permits for single-family construction were up 3% in August to the highest level in 5½ years). Pending home sales fell 1.4% for July and another 1.6% for August. Home values – as measured by the S&P/Case-Shiller Home Price Index – had risen 12.4% in a year by July.9,29,30,31

Contrary to the assumption of many, mortgage rates actually declined in the quarter. Eyeing Freddie Mac’s June 27 and September 26 Primary Mortgage Market Surveys, we see the following descents: 30-year FRM, 4.46% to 4.32%; 15-year FRM, 3.50% to 3.37%; 5/1-year ARM, 3.08% to 3.07%; 1-year ARM, 2.66% to 2.63%.32

Looking back … looking forward. The S&P 500 ended Q3 at 1,681.55, the NASDAQ at 3,771.48 and the DJIA at 15,129.67, finishes that lead to the impressive Q3 and YTD numbers seen on the following chart. The Russell 2000 closed at a new all-time high of 1,078.41 on September 26, rising 9.85% for Q3 to end September at 1,073.79; the CBOE VIX fell 1.54% in Q3 and ended the quarter at 16.60.1,2

% CHANGE YTD 3Q CHG 1-YR CHG 10-YR AVG
DJIA +15.46 +1.48 +11.95 +6.31
NASDAQ +24.90 +10.82 +21.13 +11.11
S&P 500 +17.91 +4.69 +16.41 +6.88
REAL YIELD 9/30 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.45% -0.78% 2.25% 1.95%

Sources: online.wsj.com, bigcharts.com, treasury.gov – 9/30/131,33,34
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

The drama in Washington is on every investor’s mind and hopefully will not become the defining political and economic event of the fourth quarter. Should the shutdown drag on for more than a week, Q4 GDP could be impacted by fractions of a percentage point. Should the fight over the debt ceiling be prolonged, who knows what might happen. The last time the U.S. faced the risk of default (summer 2011), S&P downgraded America’s credit rating and a 14% correction hit the Dow. Perhaps earnings season can serve as a bit of a distraction, although hopes aren’t particularly high for this next one; some of the major factors that have contributed to corporate profits (super-low interest rates, a weak greenback, minor inflation and sustained demand from emerging markets) may be lessening. So there are challenges aplenty for Wall Street in the coming quarter. Who knows – if stocks can vault over these obstacles as easily as they have so far in 2013, there may be more upside in the final quarter of the year.35

Hopefully, the fourth quarter will be less dramatic than many analysts envision. I’ll recap how it went and how global markets fared early in January. Should you have financial questions or concerns at the moment, contact me at ofs@one.net

Sincerely yours,
GREG OLIVER

Citations. Oliver 7p8586p89769876p986p986p98p989//9887
1 – online.wsj.com/mdc/public/page/2_3024-m_globalstockindexes.html [10/1/13]
2 – blogs.wsj.com/moneybeat/2013/10/01/russell-2000s-record-points-to-sp-500-breakout-too/ [10/1/13]
3 – tinyurl.com/nkv5gh8 [9/18/13]
4 – dailyfx.com/forex/market_alert/2013/09/20/Bullard_Suggests_Fed_May_Taper_in_October_Dollar_Rises.html [9/20/13]
5 – ncsl.org/issues-research/labor/national-employment-monthly-update.aspx [9/6/13]
6 – briefing.com/investor/calendars/economic/2013/09/16-20 [9/20/13]
7 – usatoday.com/story/money/business/2013/09/27/sept-consumer-sentiment/2882673/ [9/27/13]
8 – usatoday.com/story/money/personalfinance/2013/09/24/consumer-confidence/2860637/ [9/24/13]
9 – briefing.com/investor/calendars/economic/2013/09/23-27 [9/30/13]
10 – reuters.com/article/2013/09/13/idUSLNSDKE97K20130913 [9/13/13]
11 – ism.ws/ISMReport/MfgROB.cfm [10/1/13]
12 – ism.ws/ISMReport/NonMfgROB.cfm [9/5/13]
13 – bls.gov/news.release/ppi.nr0.htm [9/13/13]
14 – miamiherald.com/2013/09/26/3652436/obamacare-program-for-small-business.html [9/26/13]
15 – dailyfinance.com/2013/08/06/obama-shuttdown-freddie-mac-fannie-mae-mortgages/ [8/6/13]
16 – tinyurl.com/lg4yjk7 [9/28/13]
17 – marketwatch.com/story/syria-intervention-fears-hit-global-markets-2013-08-27 [8/27/13]
18 – tinyurl.com/lexe8vw [9/1/13]
19 – bbc.co.uk/news/world-middle-east-14703995 [9/28/13]
20 – sfgate.com/technology/businessinsider/article/LIVE-Thousands-Of-Companies-Around-The-World-Are-4858840.php [9/29/13]
21 – chinapost.com.tw/taiwan/national/national-news/2013/10/03/390366/Taiwan-to.htm [10/3/13]
22 – economy.com/dismal/outlook/country.aspx?geo=IEUZN [9/30/13]
23 – etftrends.com/2013/09/abrupt-resignations-in-coalition-government-upends-italy-etf/ [9/30/13]
24 – mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html [9/30/13]
25 – coinnews.net/2013/09/30/gold-silver-soar-in-quarter-us-bullion-coins-split-in-september/ [9/29/13]
26 – marketwatch.com/story/oil-futures-drop-on-shutdown-fears-china-data-2013-09-30 [9/30/13]
27 – online.wsj.com/mdc/public/npage/2_3050.html?mod=mdc_curr_dtabnk&symb=DXY [10/2/13]
28 – reuters.com/article/2013/09/30/markets-grains-idINL1N0HQ0YU20130930 [9/30/13]
29 – fool.com/investing/general/2013/09/19/existing-home-sales-rise-17-on-mortgage-rate-rush.aspx [9/19/13]
30 – investorplace.com/2013/09/new-home-sales-rebound-in-august-after-july-slump/ [9/25/13]
31 – foxbusiness.com/economy/2013/09/18/housing-starts-permits-miss-expectations-in-august/ [9/18/13]
32 – freddiemac.com/pmms/ [10/2/13]
33 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F1%2F12&x=0&y=0 [9/30/13]
33 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F1%2F12&x=0&y=0 [9/30/13]
33 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F1%2F12&x=0&y=0 [9/30/13]
33 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F30%2F03&x=0&y=0 [9/30/13]
33 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F30%2F03&x=0&y=0 [9/30/13]
33 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F30%2F03&x=0&y=0 [9/30/13]
34 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/2/13]
35 – usatoday.com/story/money/markets/2013/09/30/stocks-quarterly-roundup/2896279/ [9/30/1

What If America Shatters Its Debt Ceiling?

What If America Shatters Its Debt Ceiling?
The global economic consequences could be severe.

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BY GREG OLIVER

In October, America may risk running out of cash. Treasury Secretary Jacob Lew recently urged Congress to lift the federal debt limit before October 17. Secretary Lew claims that if nothing is done by that date, the Treasury will have only about $30 billion in available cash to pay down as much as $60 billion in daily net expenditures. The nonpartisan Congressional Budget Office has a slightly different opinion: it believes that the government will run out of free cash sometime between October 22 and November 1 if a stalemate persists on Capitol Hill.1,2

Many Americans may confuse the impasse over the debt ceiling with the sparring over the federal budget, which has made headlines all September. October 1 was set as a deadline for Congress to pass a stopgap funding measure to avoid possible shutdowns of certain federal agencies. The debt ceiling could be breached in mid-October. Technically speaking, the debt limit was already hit on May 19, with the Treasury Department taking what Secretary Lew calls “extraordinary measures” to keep enough cash on hand, such as dipping into exchange-rate funds.1,2

America has never defaulted on its debt before; what would happen if it did? No one particularly wants to find out. “Any delay in raising the debt ceiling would have dire economic consequences,” respected Moody’s Analytics economist Mark Zandi testified in front of Congress last week. “Consumer, business and investor confidence would be hit hard, putting stock, bond and other financial markets into turmoil.”1

If the debt ceiling shatters, the Bipartisan Policy Center estimates that America would have enough cash on hand to pay 68% of its debt through the end of October. It would have to borrow to meet the $42 billion in Social Security and Medicare payments due in November.2

Global markets might get a systemic shock if America defaulted on bond payments. Investors might have one of their core assumptions upended – the assumption that Treasuries are the safest investment on earth.2

Couldn’t the government just partially pay its debts for a while? Could the Treasury pay off $30 billion in select debts each day and let other debts linger? This approach – known as prioritization – sounds reasonable, but it may not be doable.

The Washington Post reports that Treasury Department computers receive upward of 2 million invoices per day. Software confirms the math on them and greenlights the payment for each one of them, and this all happens dozens of times per second. According to the BPC, the federal government makes almost 100 million different monthly payments on its debt this way. Secretary Lew dismisses the approach; as he wrote in a letter to House Speaker John Boehner, “Any plan to prioritize some payments over others is simply default by another name.”2

Aren’t there some “end runs” the Treasury could make around the problem? In the (very) short term, the Treasury could simply let invoices pile up and delay payments for a particular day until it had enough cash to pay every debt obligation for that day. Or, the Office of Management & Budget could tell assorted federal agencies to slow down the rate of invoices headed to the Treasury, informing them that they would have to wait until later in the year to spend certain monies allocated to them (this is called “apportionment”).2

Two beyond-the-left-field-fence fixes have also been suggested: the possibility of President Obama declaring the debt ceiling unconstitutional under the 14th Amendment, and the idea to mint a $1 trillion coin.

Section 4 of the 14th Amendment says that “The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” In 2011, White House legal advisers told President Obama that this 1868 reference to the repayment of Civil War liabilities had dubious value as a tool to lift the debt limit.3

Georgia lawyer Carlos Mucha gained fame in 2012 by proposing that the Treasury authorize the U.S. Mint to make a $1 trillion platinum coin which could be deposited at the Federal Reserve. Once deposited, Mucha claimed, the Fed could credit the federal government’s account for $1 trillion and everything would be solved. An obscure passage in the 1997 Omnibus Consolidated Appropriations Act supposedly provides a rationale for this; according to its author, Rep. Mike Castle (R-DE), the passage was written to help coin collectors. In January, Treasury Department spokesperson Anthony Coley told the Washington Post that “neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit.”4,5

The world waits & watches. As we get into October, the debt limit will become more and more of a global concern – one that will hopefully fade through negotiation and compromise.

Citations.
1 – nytimes.com/2013/09/26/business/treasury-warns-of-potential-default-by-mid-october.html [9/26/13]
2 – washingtonpost.com/blogs/wonkblog/wp/2013/09/25/debt-ceiling-doomsday-comes-oct-17-heres-what-happens-next/ [9/25/13]
3 – nytimes.com/2011/07/25/us/politics/25legal.html [7/24/11]
4 – nytimes.com/roomfordebate/2013/01/13/proposing-the-unprecedented-to-avoid-default/platinum-coin-would-create-a-trillion-dollar-in-funds [1/13/13]
5 – washingtonpost.com/blogs/wonkblog/wp/2013/01/12/treasury-we-wont-mint-a-platinum-coin-to-sidestep-the-debt-ceiling/ [1/12/1

The Government Shutdown

The Government Shutdown
Basic information and frequently asked questions.

121social_20110127_071447

BY GREG OLIVER

As you have no doubt heard, the United States government shut down at midnight (Eastern) October 1, 2013. There are many questions and concerns about this situation, but here are some basics.

What happened? In short, Congress did not pass any of their appropriations bills. These bills provide money to various to federal agencies. Federal law requires agencies without these funding laws in place to close.1

How long will this last? As with other shutdowns, this is largely up to the two major parties and their abilities to reach whatever deal is necessary to get the bills passed. If we look to history, the two most recent government shutdowns happened in the Clinton administration. One only lasted five days. The other lasted three weeks.1

What’s closed, what’s opened? Not every public service is shut down entirely, as not every agency requires appropriations to function. Social Security and Medicare are not affected, active duty military continue to function, as does the Department of Defense, as do intelligence, law enforcement, and our embassies overseas. Some are only partially closed; U.S. Courts will be open for 10 days, for instance.1,2

CNN has a frequently updated list of shutdowns at:

How is this different from the debt crisis? They are different situations, but one can affect the other. The debt crisis relates to the separate matter of establishing how much money the U.S. Government can borrow in order to fund its various agencies and programs. However, Treasury Secretary Jack Lew says that the crunch is coming soon – no later than October 17.4

With the shutdown a fluid situation, it’s difficult to say when this will be resolved. Whether you are a government employee or an ordinary citizen, it’s only natural to be concerned. It may be a good time to contact a financial professional and inquire if and how the shutdown may affect you.

Greg Oliver / 868768768767868
Citations.
1 – latimes.com/nation/politics/politicsnow/la-pn-government-shutdown-q-and-a-20130930,0,5564531.story [9/30/13]
2 – cnn.com/interactive/2013/09/politics/government-shutdown-impact/index.html?iid=article_sidebar [10/1/13]
3 – businessinsider.com/government-shutdown-debt-ceiling-obamacare-2013-9 [9/30/13]
4 – money.cnn.com/2013/09/25/news/economy/debt-ceiling-lew/index.html?iid=EL [9/25/13]

The Government Shutdown, Basic information and frequently asked questions.

The Government Shutdown
Basic information and frequently asked questions.

BY GREG OLIVER

As you have no doubt heard, the United States government shut down at midnight (Eastern) October 1, 2013. There are many questions and concerns about this situation, but here are some basics.

121social_20110127_071447.1

How long will this last? As with other shutdowns, this is largely up to the two major parties and their abilities to reach whatever deal is necessary to get the bills passed. If we look to history, the two most recent government shutdowns happened in the Clinton administration. One only lasted five days. The other lasted three weeks.1

What’s closed, what’s opened? Not every public service is shut down entirely, as not every agency requires appropriations to function. Social Security and Medicare are not affected, active duty military continue to function, as does the Department of Defense, as do intelligence, law enforcement, and our embassies overseas. Some are only partially closed; U.S. Courts will be open for 10 days, for instance.1,2

CNN has a frequently updated list of shutdowns at: http://www.cnn.com/interactive/2013/09/politics/government-shutdown-impact/index.html?iid=article_sidebar

How is this different from the debt crisis? They are different situations, but one can affect the other. The debt crisis relates to the separate matter of establishing how much money the U.S. Government can borrow in order to fund its various agencies and programs. However, Treasury Secretary Jack Lew says that the crunch is coming soon – no later than October 17.4

With the shutdown a fluid situation, it’s difficult to say when this will be resolved. Whether you are a government employee or an ordinary citizen, it’s only natural to be concerned. It may be a good time to contact a financial professional and inquire if and how the shutdown may affect you.

Citations.
1 – latimes.com/nation/politics/politicsnow/la-pn-government-shutdown-q-and-a-20130930,0,5564531.story [9/30/13]
2 – cnn.com/interactive/2013/09/politics/government-shutdown-impact/index.html?iid=article_sidebar [10/1/13]
3 – businessinsider.com/government-shutdown-debt-ceiling-obamacare-2013-9 [9/30/13]
4 – money.cnn.com/2013/09/25/news/economy/debt-ceiling-lew/index.html?iid=EL [9/25/13]