Stress Not! Ways to Build Financial Strength During Chaos
What is stressing you out right now? Fear of sickness or death for yourself or a loved one? Losing a job or a business? Watching your retirement savings evaporate (where does the money go???) Being sequestered at home with spouse, kids, dogs, roommates and in-laws for a month? Running out of toilet paper? These are all real stresses and sometimes it feels like there is no escape. I mean, even the parks are closed!
There are some truths though. First, we will certainly get out of this mess - there is an end game if we all stick with the plan. Secondly, the American spirit has once again proven itself to be jedi strong. We may be hunkering down for an unplanned springtime hibernation but we’re all supporting each other admirably in this brave new sequestered world of ours. Netflix and online video game usage is booming.
Despite the health risk of the pandemic, probably the biggest stress in our lives right now may be financial related. No one is exempt from the losses seen in our local communities or on Wall Street and the uncertainty of what is to come may be keeping you up at night. We really are all in this together - the entire planet!
Take control
There are things you can do now to create stability in your current finances as well as come out of this economic downturn stronger and more prepared for whatever comes next.
First, let’s help guide those that are the most impacted right now. If you are one of the already more than 10 million Americans who have lost their jobs due to business closures and the slowing economy, assistance is on the way in the form of increased unemployment benefits. So, if you’ve lost your job:
- File for unemployment in your state. Depending on what state you live in, your unemployment office may be physically closed right now but you can still call or file online. Look up your state’s options for filing for unemployment.
- Federal unemployment requirements have been eased to include self-employed and gig economy workers. On top of that, the Federal Government is adding $600 per week to what your state provides and is also extending benefits by another 13 weeks.
While a large number of us are currently out of work awaiting our jobs to (hopefully) resume so that we can get back to our regularly scheduled lives, others remain employed albeit working from home or even with reduced hours. Even for those in essential businesses there is a level of uncertainty due to the inevitable slowdown in spending across the board potentially impacting all reaches of our economy.
There is much outside of our control right now, but there is much we can do to handle what IS in our control.
We don't know what we don't know but we can:
Be a Budget Setter
Assess the bare minimum you need to stay afloat while uncertainty exists. Set a budget accordingly and stick with it. If you are able to, lessen how much you typically spend which should be easy to do if you aren’t going to happy hour, getting your nails done, going to concerts, shopping at the mall, dropping off at the dry cleaners, etc.
Do NOT satisfy your boredom at home with shopping online - now is not the time to further stress your finances
Be Current with Your Bills
- Don’t get behind in your rent, utilities, etc. if you can afford to pay. The liabilities you have aren’t going to go away so be responsible! Otherwise, you’ll have additional interest or late fees to worry about later. Plus, your responsibility helps others - when we meet our financial obligations there is always someone at the other end that also has to meet theirs.
Be Frugal
- Look at all the monthly recurring charges on your credit card and stop paying for stuff you don’t need. Does anyone else have a huge stack of unread The New Yorker or The Economist magazines? Have you been adding things you don’t even wear to your shoe collection each month only because you signed up for a random delivery service? Everyone likes surprises but the need for new shoes may be pretty low on the priority list right now.
- Tabulate how much you spend on certain things and cut back where you can. Do your online shopping habits appear ridiculous when you look at it all at once? If, say, you’re spending $500 a month on miscellaneous purchases that you didn’t really need (new tracksuit for Poppy the poodle to add to Poppy’s incredible designer wardrobe, that amazing turmeric super-capsule of health that you know you will never actually take, the latest in-home piece of exercise equipment you saw while watching late-night TV which will simply end up tucked away in the back of your garage,) cut it out! Take that $500 spend allowance and cut it in half. If you can do better, do better.
- Look at your mobile bill - are you paying for added services you don’t need right now? International roaming, huge cloud data storage that you never actually use? Your mobile bill is a great place to see if you can save another $10 - $30 a month.
- Replace things you were spending money on with low-cost or free alternatives. Did you go to the movies every weekend? Have an in-home movie night complete with popcorn, candy and 2-liter of soda pop (or wine as the new trends dictate.) Your yoga studio is probably closed so take that $15 you’re saving per class and watch them for free on YouTube. There are plenty of online yoga videos so that you can down dog in the comfort of your in-home, virus-free yoga mat.
- Don’t get tricked into buying something you don’t need. Your email inbox is likely flooded with special offers and discounts for things you aren’t even in the market for. Delete delete delete! Same for auto loans. Auto loan rates are nearing 0%. Terms are as long as 70 months. If you’re happy with your current car and don’t NEED a new one - remember that saving means keeping your cash, not giving it to someone for something you don’t need just because it seems like a great deal. Self control!
Be a Saver
- Ideally have a 6 month cushion of basic expenses saved up. That can be hard to do for many of us so start by saving up for at least one month’s worth of expenses. Once you’ve met that goal, work on month two. If you have to, target even just a week’s worth at a time. Keep going until you have your safety net. If you have never been an aggressive saver before, you will realize how easy it can be and how quickly you can reach your target just by making a plan and prioritizing it. It will also feel really good once you know you have a backup that gives you security and keeps you in control!
Be Secure
- Change all of your online bank account passwords. This is something you should do at least every 6 months anyway. Now is the time to take advantage of that extra downtime so make this a priority. There are a lot of coronavirus scams going around so this will be an added layer of protection for your finances.
- While you’re at it, review all of your bank statements and charge accounts to make sure there has been no fraudulent activity.
Be Informed
- Bone up on financial awareness and intelligence. Read some books, read the financial journals, find a podcast or two that you like. The more you know, the smarter you will be financially. Besides, what else are you doing right now?
- If you’re not already, start regularly tracking your finances. Free online tools like Personal Capital and others are a great way to track your inflows and outflows as well as your net worth. The act of tracking alone makes one much more likely to meet their financial goals.
- On the other hand, if it will only depress you (especially if you have retirement investments that are losing bigly right now) try to avoid looking at your IRA and brokerage statements. If you’re young enough and not nearing retirement age, now is not the time to be selling your stocks at huge losses - especially from IRA accounts where you can’t even take advantage of the tax loss benefits.
Mom always said: Don't spend your Government stimulus check before you get it!
If You Need Money Now
- Friends & family loans are a terrific resource. In times of need, we want to help our loved ones so that should be your first option (unless you have consistently bad borrowing behavior in the past - shame on you!)
- Get a personal loan from a bank. Bank lending restrictions are easing a bit so you may be able to leverage their money in the meantime. If you need a small business loan, there are lending options for you too including through the SBA. Paycheck Protection loans are a thing too. Those can help you keep your employees paid while
- The gig economy is busy! Driving services like Uber are still permitted and food delivery for local restaurants is waaaaay up.
- Look for other temporary or part-time work in your area. Despite the shut downs, there are many industries that are considered essential and so are exempt from closing. Generally, each state uses Federal guidelines but there may be some differences, like liquor stores - hang tough Pennsylvanians! (In other news, moonshine still sales skyrocket in the Keystone State.) For those in Florida who are now just starting Governor DeSantis’ mandatory stay-at-home order, here is a comprehensive list of essential businesses. This will tell you where the jobs are!
If You Have Money
- There will be opportunities for investors coming out of what now looks to be a pandemic-induced recession. Stock prices are tremendously low, fuel prices are low, real estate will offer up opportunities we couldn’t have imagined two months ago. Hold onto cash and be ready to pounce when the time appears right.
- You may even be in a position now to make personal loans to friends or family to help keep them afloat or even grow their business all the while making some interest in return. If you do plan on making a loan to someone you know, be sure that the interest rate falls within your state usury laws and use a loan agreement template that you can both sign. This will ensure the legality of the loan and help get you paid back!
- If you were already planning on making a large purchase (a new car, household appliances or furniture, technology, real estate, etc.) you may get some nice deals now or even better ones in another month. Be a smart shopper!
Be Steadfast
Even after our eventual escape from quarantineland, there will still be a period of time until everything feels “normal” in our businesses and in our bank and retirement savings accounts. Until then, take each day at a time, make only smart financial decisions and pat yourself on the back every day that you do so.
Be Rewarded
It’s important to remember that this, too, shall pass. There will be light at the end of this strange tunnel and, hopefully, we all take the opportunity to focus on what’s most important.
One final tip - put aside some cash right now as a reward. Maybe for a nice dinner out, a weekend getaway, those Bose noise canceling headphones you always wanted (why oh why don’t I have those already to drown out all those people in my house?) or perhaps tickets to the ball game. At the end of all this, we will have deserved it.
Additional resources to deal with the coronavirus