Episode #102: "Financial Fallout: Understanding the Impact of a Government Shutdown"

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Transcript

Welcome And Guest Introduction

Speaker 0:01

Welcome to the Fiscal Physical Podcast. Join us today's week as we sit down with the founder of Alchemy Wealth Management and author of your physical physical, Ryan Nelson. Tune in to gain valuable insights and practical tips as we simplify complex financial concepts into digestible lessons. From budgeting to retirement planning, this podcast is your go-to resource for mastering financial literacy.

Aaron Hoisington 0:33

Welcome everybody. This week's episode of the Fiscal Physical Podcast. My name is Aaron. I am here with Ryan Nelson, founder of Alchemy Wealth Management, published author. Find his book, Seven Keys to Becoming Financially Fit on Amazon. I know I read it. It is awesome. I have a copy in my office, and uh it's uh it's it's a good read. It's a good read to say the least there. But uh Ryan, how are how how's the day going for you, my man? It's going well. Yeah, so far so good. How's your day going? I love it. I love it, man. I'm I'm I'm happy to be here, happy to be discussing these uh financial topics, increasing financial literacy across the globe, we could say, yeah, when it comes to this. So um, but uh no, I'm I'm I'm ready to jump into this week's topic. Uh um one that is an interesting one and and something we're gonna dive into government shutdowns. And so you know it's an interesting piece of it. Uh, you know, it's like the when the wheels of our master come grinding to a halt, like, but I don't really know what happens with a government shutdown, how it kind of works. I feel like for years and years it's always been threatened, it's going to. There's a partial shutdown or a full shutdown. But um, since we are a financial podcast here, I'd be really curious to see um what it means or if there's any impacts when it comes to the financial side of things. So um, I'm hoping you can kind of break that down for our listeners, maybe give a bit more insight and uh, you know, teach us some stuff.

Defining Government Shutdowns

What Stays Open And What Doesn’t

Market Reactions And Volatility

Ryan Nelson 1:54

Absolutely. Let's do it. So um, yeah, what is a government shutdown? It's it's when Congress hasn't passed funding, and so certain federal operations pause until they do pass the funding. Um I you know, we'll talk about the financial side of it from the political side. You know, I don't even know the why this stuff exactly happens, and it's kind of uh I in, you know, I think a lot of people find the whole exercise of passing the budget to be um sort of a silly exercise. Um but so from uh uh just purely financial standpoint, what happens when Congress doesn't pass this funding? And so we hear on the news that there is a federal shutdown. And so um, you know, the I think the first thing is certain people will work and some people won't work. So federals or so like essential services are gonna continue to work. So like the police, national security, right? Some like health and wellness roles, they'll continue to just operate normally. Um, but then there's gonna be other federal employees that you may hear hear are furloughed, so they won't they won't work or their pay is delayed. Um, and then there's kind of a uh some federal contractors, it could be up in the air, what exactly happens with them. Um so it certainly does affect um some people. That said, how does it affect us as the public if we're not one of the people that is potentially you know getting furloughed or something? The reality is a lot of the services that are directly or like um sort of public facing continue to operate as normal. So like your mail, it keeps running, right? You've you've probably never seen your mail stop getting delivered during a federal shutdown. Um, so a lot of these, you know, social security and Medicare benefits continue to get paid out as normal. Their call centers and processing um continue. They can be slow as always, but um, you know, IRS, their core functions continue at like normally. Um that said, you might see if you show up to a federal or like to a national park, you might see that the the park is closed or has limited hours, right? So there are implications and it you can see it as a just a member of the public, but a lot of those sort of core systems just to continue to run as is, which is obviously good for us, and right that there's a reason why they do that, right? Um, and so in general, from a stock market standpoint, so if you say, okay, this isn't necessarily going to affect my like day-to-day life, I'm still getting my social security paycheck, I'm still, you know, showing going to the grocery store, my groceries are still there, uh, my mail's being delivered. I don't feel like this immediate impact on my life. Well, what about my investment account? Is my investment account feeling this, right? And I would tell you that in general, the the markets tend to dislike uncertainty. And anytime they're the anytime the market or the the federal government shut down, there is an element of uncertainty there, right? And so volatility can rise. And uh that could be that could negatively impact investments, I suppose. That said, this past shutdown, the stock markets seemingly just yeah, just don't tend to acknowledge it.

Aaron Hoisington 5:03

I was gonna bring that up. It was really funny you meant because I have a note here. I was like, did anything happen with this last one? I mean, at the time where we're you're listening to this, I don't know what the world's gonna be at that point. It's hard to say, but um, I was gonna say, I was like, didn't really seem like there was much of an impact as of as of today. Right, right.

Investor Mindset And Staying The Course

Ryan Nelson 5:21

And I mean it it kind of makes sense, right? If you start thinking about most, you know, most of the companies you're investing in are public companies. These companies may have some reliance on the federal government. I mean, nobody seems to have this belief that a shutdown's gonna last like forever. So it seems to be these temporary lulls where they're shut down. So it's like, okay, is it really gonna affect how many Apple or how many computers Apple sells, or how many people are gonna use uh you know, Google's services, or like is it gonna limit how many people are logging into Netflix? Like, so when you think about the actual companies you're investing in, it's like, okay, yeah, I guess that sort of makes sense that this is this impacts the world in a way, but also it doesn't have the biggest impact on maybe the companies you're investing in, right? Sure. Um, so um, yeah, and in general, I do think that there is like not a lot of long-term effect, even from past shutdowns, right? There may be these like short-term short-term increase in volatility, um, where things are a little emotional, right, when it happens, and then like as things settle back down, it's like, oh yeah, like when you zoom out, it's like, oh yeah, there's basically no impact. And so um, you know, maybe it's just investors getting more wise. Who knows, right? Sure. Doubtful, but possibly um so so as you're thinking about this um yourself, it's like, okay, so what what do what do I need to do? Like as an individual, what do I need to do to prepare for government shutdowns, either um, you know, any government shutdown in the future? Um, so if you're a government employee or like a federal worker, um certainly if you're at risk of being furloughed, that might mean that you you'd want to take this into account with your emergency savings. So maybe you need a larger emergency savings than somebody else because you know your job's at risk of being furloughed and it there's just a larger risk there of receiving less pay or your pay being delayed. Um so I would certainly be considering that as part of your um variables you use to determine how big your emergency funding should be. Um other than that, what I would say is avoid any reactionary portfolio moves. So you don't want to uh sort of panic or make a move that when that you'll regret a week from now, a month from now, a year from now, right? So stay aligned with your long-term, you know, your long-term plan. So you should have determined what your plan is, determined um kind of what your risk tolerance and risk capacity are, and invested in investments that align with that risk tolerance and those goals. And a government shutdown doesn't change any of that. Sure. So as long as you go back to your original goals, um, you would realize, like, okay, yeah, I'm still invested in the right things for my goals. There's no need for me to make any sort of reactionary moves and again do something that I might mistake um down the road. Um, and other than that, just kind of keep doing keep following your plan, right? Maintain the same contribution per, you know, if you're putting money into your 401k or into your brokerage account, continue that stuff sort of business as normal. Um and I would say kind of similar to the top part, if you are a so so if you if you're an individual who works for the government and you think that you could get far furloughed, then of course you want that breaker emergency savings. Similarly, there's some government like contractors, so the business itself might get paid by the US government, right? And so it's sort of an extension of that. You might want to, if you're the business owner, have some contingency plans, and if you're the employee, also calculate that in almost as if potentially you were a government employee. Um, but I think that from a big picture standpoint, you know, again, time in the market beats timing of the market. So um, you know, there may be increased volatility when uh during a government shutdown, but the reality is as long as you're invested in your goals, you have the capacity just to stay the course, right?

Aaron Hoisington 9:08

Oh yeah.

Ryan Nelson 9:09

Yeah. Oh yeah. And uh I'd say uh again avoid that reactionary or any you know dramatic reactionary moves, stay the course. And uh, you know, again, time in the market beats timing of the market. So I love it.

Emergency Funds For Furlough Risk

Aaron Hoisington 9:20

That's awesome, man. That's it's really well broken down just to kind of because I I've always wondered. I mean, I've been like I was thinking about it, I was like, I've been through several government shutdowns, and I don't really feel like I really was affected at all. Um now were they full government shutdowns? I don't know. I don't know anything like that. It's like, but I don't visit a lot of national parks myself. Yeah, yeah, yeah. Those little things, I'm like, cool, as long as like my my services are still up and like I still food at the grocery store, I feel pretty good about that. But yeah, I feel like with anything nowadays, I mean maybe I'm overblown this, but you you turn on the news or you listen to whatever, and it's like, oh my gosh, this is a horrible thing. Right. Everything, the sky is falling, the government's shutting down, and it's like, hey, just take a step back and like be like, cool, break down how it affects you. And like if you are one of the people who's affected, all right, you're not the first person who's affected by this. I'm sure there are support programs and such too to look at. Yeah. Um, just to make sure that you're as prepared as possible if these do specifically affect you. But um, really well said with like the the time in the market beats uh timing the market. Um, I love that phrase along with stay the course naturally, but I think that it really uh really uh really is applicable to this kind of topic, and uh honestly you can apply it to a lot of things in general, too. So awesome, Ryan. We'll really appreciate you breaking down what a government shutdown is, how it can affect people and uh the financial aspect there, and uh we'll go ahead and uh take a quick pause and uh be back on the other side of this. Everybody uh hang tight.

Speaker 10:46

And now to put the personal in personal finance.

Aaron Hoisington 10:53

Welcome back, everybody, this side of the physical physical podcast here with the uh personal section here. Uh Ryan, I got a question for you. You ready? Let's do it. All right, so what's the best deal or discount you've ever scored?

Ryan Nelson 11:07

Yeah, I I got nothing I mean, nothing big comes to mind. So apparently I haven't scored any huge deal or discount, but uh two small things come to mind. But uh I want to make sure I don't steal yours, so why don't why don't you go first?

Aaron Hoisington 11:18

I'll go first. Yeah, yeah. So so for mine, um when I I worked for four summers for the Forest Service, and uh with the Forest Service I was a I had my firefighting card and they call it a red card, is what it is. And even though it like the card is white, doesn't really make sense, but whatever. But um and there was a there's a you're familiar with Papa Murphy's. Yeah, I am there was a Papa Murphy's in the town next to mine growing up. Uh we didn't have one in mine, but in like 30 minutes away, but they had um for firefighters, they had 50% off all pizzas. Nice. So all you had to do was show your red card. And the cool thing is is that they never like looked to see if your red card was was valid or whatever. So like I didn't know until like my second year working there, somebody told me they're like, hey, you should you should get 50% off. I was like, what? And I went in and I tried it. I was like, this is awesome. And so like every time we would pass through there, we'd stop and get a couple of pizzas because it was you know 50% off.

Ryan Nelson 12:15

Yeah.

Contractors And Business Contingencies

Aaron Hoisington 12:15

And I could, and at the time, I mean prices obviously are, but I I was paying like five bucks a pizza for these things, and you could just throw them in the freezer, have them double wrap it. Like, so I I abused that. Plus, once I got out of like finished, I still had my red card. And so um, they just never checked it. And so I would still be able to use that benefit. I don't have it anymore, it's kind of a bummer. Um, and also a lot of places stopped continuing, they're stopped with that, probably because I was bankrupting them. But yeah, um you single-handedly stopped every personally. Yeah, this guy keeps ordering 50 pizzas, like, but that was one of the greatest deals like I ever ever had. And I I really used it and I was like, this is great. I'm gonna I'm gonna continue until I can't anymore here. So anyway, that was mine.

Ryan Nelson 12:58

Yeah, yeah, 50%'s pretty good. Yeah, yeah. I I I'm sure there's some good I'm sure there's I I love a good discount, so I'm sure there's some good examples of when I've scored, but I just can't think of it. But uh yeah, I remember uh back in college. Um we well, I still do go to Pizza Baron, right? Oh yeah, and uh uh I remember I was going with Steve and then we're like, yeah, we should just see if we can get one like uh just just get one half off or something. Or uh God, it might have been free. Buy one, get one free, I think. And uh so we we go up to the counter, we're just like, yeah, we'll get the uh buy one get one deal. And uh just to the guy working it, he's like, okay. Yeah, yeah. So we're just like, wait, what? Yeah. So then we uh so we did that like uh every time we went in there, and it's just like it's just like uh we you know we thought we were pulling one over on them, but it's just like I I think they just do that. Yeah.

Personal Segment: Best Deals And Discounts

Aaron Hoisington 13:48

I I will say that that Pizza Baron has love Pizza Baron first off, it's phenomenal. Um I uh they honestly will kind of honor whatever deal like you say. You're like, yeah, cool. I got this. Like I one of my buddies sent me a coupon or sent me a screenshot of a picture of a coupon one time. And it was like it was like buy one, get one half off, and like a free fries or something like that. And this thing was so I don't even know if it was their logo anymore, like for it. And I just like showed the guy's like, yeah, what's this say? And I was like, This, he's like perfect, and then just like rang it up. Yeah, yeah.

Ryan Nelson 14:25

Yeah, like you said, they they honor anybody's coupons. Yeah, um, but uh another kind of funny example in high school or in uh college, uh it was like me, buddy Chris that you know, and uh I think Vinny, we'd go to uh the mall and there was God, what was it called? Not sharper image. There was this Brookstone, yeah, yeah, and uh they used to sell these like mini remote control helicopters. Oh, and uh you know, so it's like 35 bucks for the remote control helicopter or whatever. So we'd get the remote control helicopter, they're like, hey, do you want like it's like four dollars for like the insurance policy or whatever? We're like, yeah, let's do that. And uh so then we're like flying these things all over. And they're like at least back then, they were like impossible to fly. Yeah, they're probably easier to fly now, they're probably more stable and stuff. Maybe, but back then they were like impossible to fly, so they'd be just running into the ceiling and walls and stuff because you can't control these things, or we'd fly them outside, they'd get like stuck in a tree over in the winter and stuff. And and uh so then we'd just like fly them all over, break that it would break eventually, obviously. And then so we just we had the insurance policy, so we just take it back to Brookstone. They're like, not a problem, we can get you a new one. And so they'd give you a new one. It's like, do you want the insurance policy on this? It's four bucks. We're like yeah, yeah, yeah. And then so it's just this never-ending trait. You just go fly it till it breaks, and then you just bring it back. It's just like four dollars every time.

Aaron Hoisington 15:36

You have your initial investment, and it's like just four dollars after that for helicopters. Or whatever it was, right? I don't remember, but yeah, that was kind of funny too.

Ryan Nelson 15:42

So that's a great one.

Aaron Hoisington 15:43

So we got quite a number of those helicopters for like four bucks or whatever. I love that. That's hilarious. I I've heard both of those stories too, and I think that they bring a smile to my face every time. I'm like, yeah, just you know, taking advantage of what you maximizing your benefits, yeah, if you will. Yeah, exactly.

Ryan Nelson 15:57

I've I've been jonesing to fly a helicopter ever since. A little baby helicopter ever since.

Aaron Hoisington 16:01

Oh, yeah. Actually, I was at a I was at a white elephant gift exchange, I think, last year or the year before. Not yours, but a different one. And I tried my darndest to get this toy helicopter. Like it got unwrapped, and I was like, oh, nice. And I was doing the math on where we sat, as my wife had one, I had one, and I was like, oh, we're guaranteed this helicopter. Like, and then it just did some weird thing happened. I did not see, like, somebody grabbed that, and I was like, You gotta be kidding me, you don't need that helicopter. You're 75 years old. Maybe you do, like, but it's funny. Anyway, I love those little things. But um, awesome, Ryan. Appreciate it. Uh, challenge the listeners out there. What's the best deal or discount you've ever scored? Um, let us know. Email us at podcast at alchemywealth.com. Uh, send us a text, let us know, post your comment wherever you might be uh doing that, and uh appreciate everybody tuning in. And uh, Ryan, I'll uh turn it over to you, my man. As always, stay the course.

Listener Challenge And Closing CTAs

Speaker 16:52

Thank you for joining us for the Fiscal Physical Podcast. Until next time, happy listening. And as always, stay the course. If you have a question or topic suggestions, please email us at podcast at alchemywealth.com. If you enjoyed today's discussion, subscribe to the podcast to ensure you never miss an episode. And consider leaving us a rating and review on your favorite platform. This helps other listeners like you find the channel. For more resources, you can visit Alchemy Wealth Management's website at www.alchemywealth.com or find your fiscal physical book on Amazon. We'd be remiss if we didn't mention the personal finances just then. First of all, please don't take anything we say as advised. The pre-titting content is for informational and entertainment purposes only. It's not an offer or a solicitation, nor should it be construed or relied upon for tax, legal, or investment advice. It doesn't consider your personal financial situation or objectives and may not be suitable for you.