Adan Salazar
February 11, 2013

An article posted on the insurance company USAA’s website is warning members “whose paycheck comes from the federal government” to “tighten up finances — just in case” and look into securing a second source of income in preparation for possibly rough financial waters ahead.


The article, titled, “Will Washington’s Spending Showdown Affect You?,” recommends outlining a budget, stocking up on cash, limiting spending on large expenses and securing an additional source of income in response to a possible federal government shutdown which could spur furloughs for all but active-duty military personnel.

A section titled, “What You Can Do To Be Prepared,” starts “In light of the uncertainty in Washington…” referring to spending and borrowing cuts set to expire or take place further down the legislative pike, and proceeds to detail four measures that can be taken to offset potential layoffs.

The first step outlines developing a budget to cut “Expenses like premium cable channels” and encourages the stemming of “frequent dining out” to “bulk up reserves.”

The next step in preparing for a possible federal government shutdown, according to USAA, involves stocking up on cash because “If there is ever a chance your paycheck could get disrupted, your first line of defense is to have cash in the bank.” The newsletter also advocates “building an emergency fund.”

The third step warns to limit spending and borrowing and to “hold off” on large expenses as “now might not be the best time to incur them.” Scott Halliwell, a Certified Financial Planner at USAA, recommends to “Keep your cash in the bank and your payments low until you see how things shake out.”

The last step all but straight up tells members to go out and look for a second job: “4. Create some new income. Look for overtime work or a new part-time job for you or your spouse. Also, if you typically get a large income tax refund, consider adjusting your withholding to keep more of that money now.” (emphasis added)

According to USAA, all of this should be done in preparation for three important spending-related deadlines that will occur in the first quarter that could yield “potential fallout” for member finances.

Dan Brouillette, senior vice president of government and industry relations at USAA, states one of the crucial financial deadlines concerns the “debt ceiling” set to expire May 18, 2013 which will limit government borrowing.

The other two deadlines are planned spending cuts and an expiration on government’s spending authority.

“First, $110 billion in so-called “sequestration” spending cuts — originally scheduled to kick in Jan. 1 but then put off in the “fiscal cliff” deal — are set to take effect March 1. Then, on March 27, a continuing resolution that provides spending authority for government operations will expire.”

Brouillette warns that, while active-duty military members’ pay should not be affected, “an impasse that prevents authorization of new government spending could prompt a federal government shutdown,” which could effectively halt federal employee paychecks.

USAA views the “potential fallout” as “a great opportunity to tighten up your finances – just in case.”

While a full-on federal government shutdown can still be avoided, it is somewhat curious that a company which specializes in financial services for US military veterans and families would be warning of an event in which “potential fallout” and “paycheck uncertainty” may occur. Nevertheless, most of the advice offered is sound.

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