Podcast Episode - How You Can Get Through A Shutdown

On this special episode, Suze gives a step-by-step plan for surviving this government shutdown, with courage.  The suggestions Suze makes are not just for those people currently furloughed, it’s for all of us, so that we may be prepared for the what-ifs of life.

Listen to Podcast Episode:

Podcast Transcript:

Suze Orman: Welcome everybody to the Women and Money podcast and everybody smart enough to listen. Suze O here, and today's episode is not business as usual. It's not Ask KT and Suze Anything—and why is that? It's because the government has shut down.

And when Washington grinds to a halt, millions, and I mean millions of people's paychecks stop cold. Federal employees, contractors, families, small businesses that depend on that income—I have to tell you, not only is it frightening, but in my opinion, it is totally frustrating and seriously, it's just unfair. But I'm not going to get into the politics of this. It's just not right. None of it is right, just so you know.

Here's what we're not going to let happen, at least not on my watch. If this has affected you, you are not going to let this fear of what just happened paralyze you—no. Because fear makes you hide. And you know I've said it over and over again: fear is one of the main internal obstacles to wealth. You also know that I have said to you courage is one of the eight qualities of a wealthy, wealthy person.

All right, so you're not going to let fear paralyze you right now, 'cause again, fear makes you hide, but courage makes you act. So today I'm going to walk you step by step through what you can and must do right now to protect yourself, your money, and your future. And I'm going to get into the stock market with all of this as well. But really, I want us to take care of those that are going to be affected by this because we do not know how long this is going to last.

The very first thing I want you to do is just stop. Get honest with yourself, and I want you to ask yourself a question. By the way, you should get out your Suze notebooks. Just do that. You have to ask yourself the question—and all of you should do this anyway because you never know when something like this could happen to you. Not where the government shuts down, but your corporation shuts down. You get fired. Whatever it is—you have to do what I'm about to say. You have to ask yourself: what are my essential expenses?

To keep a roof over your head, food on the table, utilities and insurance. What is essential for you to live and pay? Everything else is a want. Those others are a need. Everything else is a want. Subscriptions, eating out, extra for the kids—it's all going to get cut right now, 'cause you cannot afford to waste even one dollar on something that isn't essential.

Now, obviously, even if you're affected by the federal government and you have a lot of money, it doesn't matter. You're going to get through this, OK. But the majority of you—you know, and I know—you're all still living essentially paycheck to paycheck on some level. So it's really important that you get real with yourselves.

Next, I need you to communicate before you default. The biggest mistake people make in a shutdown like this is you just go silent, you hide, you miss payments. Right, you let your credit score absolutely just sink. But on my watch again, you are not going to do that.

Instead, I want you to pick up the phone. I want you to call your mortgage lender. I want you to call your credit card company. I want you to call your utility providers. Call your landlord, and I want you to tell them the truth. "I'm a federal employee. I'm impacted by the shutdown. I'm not receiving my paycheck. What hardship program do you have? Can you waive late fees, defer payments, or reduce my bill temporarily?"

Also, I've given a podcast on this—the greatest words you could ever say, and three of the greatest words you could ever say, are: "could you please." So when you're calling these people, if you don't have the money to pay them, say, "Could you please help me? Could you please reduce my bill temporarily?" Just use those words. Now write that down, everybody, 'cause I have to tell you, you would be absolutely amazed at how many companies will work with you if you simply ask.

Because protecting your credit score really is protecting your future, but you have to be proactive. No one is going to come and rescue you. You have got to rescue yourself.

Next, if you're in a situation where you absolutely must borrow—there's a right way and a wrong way. What's the wrong way? Payday loans, cash advances, anything with sky-high interest fees that will bury you in debt. What is the better way? It's at this point in time I want you—don't faint now—I want you to use your credit cards, but only for essentials, for those needs.

Use the one with the lowest interest rate. Charge food, gas, utilities. Never withdraw cash, however, on your credit cards because that's going to cost you 21% or so. So I want you to save any cash that you may have in your emergency fund right now. And instead, I want you to put everything on a credit card at this point in time.

Why do I want you to do that? Because I don't know how long this is going to last, nor do you. And I don't want you to use up all your cash and then go to credit cards. I'd rather you use up your credit limit first and still have cash—just so you know.

Also, if you have a Roth IRA—and all of you better have a Roth IRA at this point in time—you can withdraw, remember, any of the contributions that you've made, as long as you don't touch the earnings. Just the contributions, without penalty, regardless of age and how long the account has been opened.

Now, that's your last resort. But if it's the difference really between keeping the lights on or not, you need to know that that option exists.

For all of you seriously that are listening—and I know you're thinking to yourself, this doesn't affect me. I don't work for the federal government. You're not directly impacted by this shutdown—I am begging you not to tune this out. Because this is your financial wake-up call.

Shutdowns prove one thing: you cannot rely on anyone else. Remember me all these years I've said, you have to save yourself. The government can't save you. The economy can't save you. Your family probably can't even save you. But you have to save yourself.

So the question is, do you have an emergency fund? Could you survive 12 months without a paycheck? I want you to be honest with yourself. And if you can't, I want you to start doing that and building an eight to 12 months of must-pay expenses in savings right now. Because that is what will give you true freedom and peace of mind.

I want you to think about it. You work for the federal government. And now they've shut down. You're not gonna get a paycheck. Maybe you're an air traffic controller and you're gonna have to work even though you're not getting a paycheck. You don't have a choice.

If you had a 12-month must-pay account or emergency account—that I call it—you would be all right. You could say, I can still pay my bills. This qualifies as an emergency, and you would still be relatively calm.

Those of you out there that are freaking out, it's because you don't have an emergency fund, you don't have any money saved, and you don't know what you are going to do. So therefore, you have to do certain things.

If you don't have that emergency fund of eight to 12 months, I want you to go through your subscriptions, cancel what you don't need. Look at your spending habits. Ask yourself the question: if my paycheck stopped tomorrow, how long could I last? And if the answer is two weeks, one or two months, I'm telling you—you have work to do.

Because shutdowns—or when you are fired or whenever it may be—they are painful. But they are also teachers. They teach us what happens when we don't plan, and they remind us of the power of planning ahead. Got that everybody?

Again, just like with the hurricane, you plan for the worst, but you hope for the best. And then when something happens, you are prepared. That's why I want you all to have a will and a trust and the must-have documents so that you can protect your tomorrows today.

But if you just keep putting things off and not deal with reality and something happens, now we're in trouble.

Let's talk about something that I'm sure a lot of you are worried about. Suze, the markets—what are the markets going to do? The government has shut down. Should I sell? Should I sell everything? Are you out of your mind?

Every time that there has been a shutdown, Wall Street has reacted, absolutely. But stocks may swing not just down—they may swing up as well. So when you say, should I sell before it gets worse, I'm telling you: do not panic here.

Let me just give you some facts. Let's go back to the recent shutdown in 2019. Remember that one? That one was bad—or so we thought, right? It was the longest one in US history, lasting 35 days. The headlines were terrifying. You were all freaked. I even did a podcast on it way back then if you go back that far.

But here's the truth. Do you know that during that shutdown, the Standard & Poor's 500 index actually went up about 10%? And about 12 months later, the S&P had gained about 26%. Think about that. You would have thought during those 35 days the markets would have been destroyed. But they actually went up about 10%.

The other day, I was looking at Colo's portfolio. And I was going, oh God, here we go. It was down by about $2,000. When I looked Wednesday morning, it was higher—his portfolio was higher than it was the day before they announced the shutdown. It was the fear of "it's going to shut down, we better sell." And now, a day later, it was even higher.

OK, let's go back to 2013, which was a 16-day shutdown. Guess what? The market rose about 3% while the government was closed. And in the year after, it was up nearly 20%. So you must hear me loud and clear: while shutdowns may rattle your nerves, it's only in the moment. History has shown us that they have been nothing more than a blip—just a blip, everybody.

What really drives the market long-term is the Federal Reserve, interest rates, earnings, the strength of the economy, and how much money is on the sidelines waiting to be invested—not Washington's dysfunction. So the truth is, the only people hurt by market swings are the ones who make emotional decisions. If you sold in the panic—or if you tend to sell in a panic—you lock in your losses. If you simply stay invested, you give your money time to recover and grow.

That happened with the tariffs. Aren't you glad you didn't sell? It happened when the pandemic hit. The markets went down. I was telling you, don't sell—buy, do certain things. Aren't you glad you did?

So what should you do now? You need to stay the course. If you're investing for retirement, keep contributing to your Roth 401(k), your Roth IRA. Do not stop. Do not pull money out. You need to be focused on quality—these broad-based index funds, if you want, diversified portfolios, but also the individual stocks that we have been talking about that are just fabulous, fabulous, everybody.

If you combine those individual stocks that we've been talking about with a percent of your portfolio in VOO, you're going to be just fine. You need to look at what's happening here and use this as a test of your courage. Volatility seriously is the price of admission for long-term growth. Like, I was literally hoping that these markets would go down big time so that I could buy more of the things that had been going straight up.

If a shutdown, for instance, makes you lose sleep, it's not the shutdown that's the problem—it's that your portfolio may be too risky, or you are somebody who just maybe doesn't belong in the stock market at all. And listen to me—if you have cash on the sidelines, any volatility that you're actually seeing here now is, in my opinion, an opportunity for you to invest that money.

Remember, strong companies—the ones that we have been talking to you about for the past year or so—they don't become weak just because Congress can't pass a budget. So sometimes, temporary dips are your chance to buy at a discount. But, and you know me by now, don't you? Tell me you know me by now. I only want you to invest money that you are not going to need for at least five or 10 years, preferably longer.

I only want you to invest money when your emergency—or like I say, the must-pay—account is in place. You have to get that the stock market is for long-term goals. It is not for you to invest money that you may need in the next few years. And it's not for you to invest because something's gone up 10% or 20% and you think, I should sell. No. It is for years from now—long-term investing.

The shutdown's going to come, and it's going to go. Markets are going to rise and they're going to fall. But financial independence really belongs to those who don't get shaken by headlines.

You want to build wealth? Do you want to build wealth? I want you to build wealth. I want you to make your money make more money. Then repeat after me and write down this new truth that I want you to say over and over again:

I do not sell out of fear.

I do not buy out of greed.

I invest with courage and discipline.

So what is it that I want you to take from this podcast? I want you to remember that courage is not the absence of fear. Courage is doing what you must do even when you are afraid.

And I get it, everybody. I get that it's scary when your paycheck stops. I get that it's exhausting to fight through all the red tape. But you are stronger than this shutdown. You are stronger than any market decline. You have the power to cut back. You have the power to negotiate. You have the power to protect yourself and your family.

And when it comes to your investments, courage—as I said earlier, one of the qualities of wealth—is staying the course when everyone else is panicking. That's how wealth is built.

So repeat after me:

I am my own greatest rescuer.

You're going to rescue yourself.

And that, my friends, is how you get through a government shutdown—with clarity, with courage, and with conviction that no matter what happens in Washington, you have the power to secure your own financial life.

So until next time, there's only one thing I want you to remember when it comes to your money, and it's this:

People first, then money, then things.

Now you stay safe and strong. See you soon. Bye bye.