6 Things You Should Do Today to Protect Your Finances

Economists, pundits, and a few politicians have been warning about excessive US government debt for as long as I can remember.

And given that my first memory was making a tiny snowman with my dad when I was three, that’s a long time.

Like Jeff, I believe the US government is so badly indebted that a major reset must come. Washington borrowed heavily when interest rates were low. Now old bonds are coming due at a time when global interest rates are rising. To pay those debts, the Treasury Department sells new bonds that carry higher rates (bond yields).

America faces a large bill. In August, the Congressional Budget Office estimated that the federal government would spend $2.1 trillion more than it takes in during the 2026 budget year. An earlier forecast put this year’s net interest bill at about $1 trillion. That’s money paid to lenders, leaving less room in the budget for other needs.

Congress has options to address this crisis. The problem is political palatability. To get out of this mess, the US government must run a budget surplus. That means raising taxes, cutting services, or engineering a big decline in the dollar. None of those are popular, especially in a country with a two-year election cycle.

None of this proves a crash is coming. Economic growth might bring in more tax money. Interest rates might fall. Debt may also shrink compared with the size of the economy when growth is strong.

Yet a country like the US that must keep borrowing has less room to cope when the next shock arrives. That matters most to people who need steady income and predictable costs… like retirees, no matter where they may live.

Jeff and I have been warning about this for a long time. We’ve also been providing you with plenty of options, like investing abroad, holding cash in foreign currencies, and other strategies.

Today I want to highlight six practical ways you can start building resilience against the inevitable disruption a US financial reset will cause.

But first, a word of caution: I would not use leveraged inverse Treasury ETFs (exchange-traded funds) such as the ProShares UltraShort 20+ Year Treasury (TBT) or the Direxion Daily 20 Year Treasury Bear 3X ETF (TMV) as long-term protection. They reset daily, and compounding can produce very different results from the long-term move in Treasury prices. They are short-term trading instruments, not dependable insurance.

Instead, consider the following steps.

1. Reduce exposure to rising rates. Paying down credit-card balances, home-equity loans, and other floating-rate debt may provide a more certain return than buying any ETF. You should be particularly cautious about adjustable-rate mortgages and highly leveraged property investments.
2. Keep 6 to 12 months of required spending in short-term instruments. The iShares 0-3 Month Treasury Bond ETF (SGOV), the WisdomTree Floating Rate Treasury Fund (USFR), or a Treasury-bill ladder would all work. Treasury bills are available with maturities ranging from 4 to 52 weeks. This protects against being forced to sell shares or long-term bonds after a market decline.
3. Reduce exposure to long-duration nominal bonds. Funds holding 20- or 30-year Treasuries can fall heavily when long-term yields rise. The longer the maturity, the greater the interest-rate sensitivity. I wouldn’t eliminate intermediate or long-term bonds completely. They could perform well during a recession. But they are not the obvious hedge against a debt-driven rise in yields.
4. Place 25–35% of the bond allocation in short-term TIPS. The Vanguard Short-Term Inflation-Protected Sec ETF (VTIP) is the straightforward ETF choice. Directly owned TIPS (Treasury Inflation-Protected Securities) are another option if you can hold them to maturity. Series I savings bonds are also useful for smaller amounts. The present electronic purchase limit is $10,000 per person per calendar year.
5. Hold meaningful non-US equity exposure. A reasonable range would be approximately 30–40% of the equity allocation—not 30–40% of the entire portfolio—in an unhedged international fund such as the Vanguard Total International Stock ETF (VXUS). “Unhedged” matters. A currency-hedged foreign fund removes much of the protection against a declining dollar.
6. Consider 5–10% in physical gold. The SPDR Gold MiniShares Trust(GLDM) is a handy low-cost ETF Backed by real gold. But remember: gold should be treated as insurance rather than an income-producing investment. More than 10% begins to turn insurance into a large speculative position.
7. Use commodities sparingly. Despite the advice you often hear to buy commodities, when the dollar is declining, don’t overdo it.An allocation of perhaps 2–5% to the Invesco Optimum Yield Diversified Commodity Str No K-1 ETF (PDBC) can help during an inflation shock.