You hear it all the time in investing: diversify, diversify, diversify. Merriam-Webster Dictionary defines diversity as the quality or state of having many different forms, types, ideas, etc. Basically, diversity means don’t put all your eggs in one basket.
The theory is that if you vary where you invest your money – small cap stocks, large cap stocks, government bonds, corporate bonds, mutual funds, index funds, etc – then if the market takes a hit (think 2008 and the Great Recession), your losses will be minimized. Your risk exposure is lower leaving you, the investor, feeling fairly secure with your portfolio.
Diversifying is a self preservation mechanism.
This investing basic got me thinking: We’re taught to diversify once we have money to invest, but what about before that? What about where our income comes from? Doesn’t that need to be diversified too?
(Really, my argument only applies to multiple income homes or folks who work more than one job.)
Here’s the problem: If a husband and wife both work for company X, and that company goes out of business, their potential income goes from Y to $0.
More realistically, Max and I are both active duty military. The government’s payroll office issued a statement last week saying that while they were aware that the President signed the Pay Our Military Act, no guidance had been released. As such, active duty military would not be receiving any pay for work after September 30th.
You can just imagine how wide my eyes went when I read this.
In a worst case scenario that means:
- Both Max and I will continue working as normal in spite of the government shutdown
- Our joint income will go to $0 indefinitely until shutdown is lifted
- I have to manage not one, but TWO, households financially. Remember, Max and I live in two separate homes since the military couldn’t station us together. That’s two rents, two utility bills, etc. And with Max deployed, I’m responsible for overseeing and ensuring that all of our bills get paid (to include personal and student loans)
And all without any income. Luckily, this morning guidance was finally given that active duty military would be getting paid on October 15th (yay!). No word though on November 1st’s paycheck if we can’t raise the debt ceiling.
How I’m interpreting all of this: Through no fault of our own, Max and I would have been unable to pay for all our bills because both of our incomes are generated from the same source – the federal government.
(This is still a possibility come November 1st…)
If Max and I both didn’t work for the same organization, we wouldn’t be in nearly as terrifying of a predicament. Our monthly income may be cut in half, but at least we’d still have something to pay our bills. Where we’re at now, if the government defaults and can’t raise the debt ceiling, we may need to dip into our emergency savings.
So when I say occupational diversity, I don’t mean that your office should have an ethnically varied environment. I’m talking about varying what institutions provide a household’s income. In short, if husband works at firm A, then wife should work at firm B or C or D, really just not firm A.
Has the government shutdown had any impact on your paycheck or daily life? I know Max and I aren’t the only DoD employees or military-married-to-military couple out there 🙂