Category Archives: planning

To Spend or Not to Spend? Is that Really the Question?

By now, most of the people who are going to get the $1,200 COVID-19 stimulus check, and who had direct deposit, have received it already. And those waiting on the paper check should get theirs in coming weeks.

So the question I’ve seen from a lot of people on social media is what they should do with their check. It’s been interesting, but not completely surprising to hear how some people are talking about spending their money; from taking a vacation to throwing themselves a huge party, or going out on the town, once the social distancing orders are lifted.

But there are many people where that question never crossed their minds. The thought of using that money for anything other than life’s necessities, isn’t a luxury for them. They are past-due on their rent or mortgage; have a car payment coming up; are dreading their next utility bill, and just trying to keep food on the table for their kids. 

I’m one of the lucky ones because I’m fortunate enough to still have my job, with a monthly paycheck that covers all of my bills. So I put my check into my savings account to continue solidifying my emergency funds.  I realize there are many people who can’t do that. But then there are others who won’t do that. 

I recently read a Facebook post from a woman who asked if she should use the money to pay off one of her credit cards, or if she should save the money. She went on to give additional information including the fact that she did not already have a savings account, her hours at work had recently been cut, and her boss said they would re-evaluate the future in a couple of months. After reading the additional information, I was honestly dumbfounded as to why she even needed to ask the question about whether or not she should save the money. I mean, why on earth would you spend money (even to pay off a credit card) when you’re already working fewer hours, and you’ve been put on notice that things might change again — loss of even more hours or possibly the job itself?

I do understand someone’s desire to pay have debt. But a little common sense should also come in to play. First, she admitted that she had no savings, then so she has nothing to fall back on in case of an emergency. That’s never a good place to be in. It’s actually one of the reasons many people continue to have rotating debt — something minor comes up (say a flat tire) but the person has no emergency funds, so they use a credit card; oftentimes paying hundreds of dollars more than what the item cost by the time they pay it off. If they had put money aside, they could have purchased the tires with cash.

Second, she had already experienced a cut in numbers of hours at work; which means she’s making less money now than she was a few months ago. How can anyone even be contemplating what to do with their money when they see the economic impact of COVID-19 and the Stay at Home orders across the country. And in these uncertain times, pay cuts aren’t just happening to hourly employees. My former workplace (I’ve been gone for over 10 years) had an across the board pay cut to all salaried employees making over a certain amount. Had I still been working there, I would have fallen into that cut off and therefore, have experienced a 5-10% pay cut. Even if the cuts are temporary, they still impact you in the moment, and for however long they last. I’ve often said that it doesn’t matter how much money you make, if you’re living right up to the amount of your paycheck (or over it), then even a small change can quickly turn into something worse .

And third, she’d also already noted that her company had indicated other actions may be taken at a later time. The nature of those actions, I’m sure, might include another pay cut, or layoffs, as we’re seeing around the country. That should have been enough for anyone to heed the yellow flag and proceed with caution. What good is it to pay off a credit card, in lieu of saving money, only to lose your job, and end up having to run your card back up again to pay bills, with no income. Few people realize that even payouts for unemployment benefits are far below what someone’s monthly income would normally have been.

So what’s this all about? 

In the U.S. most stimulus plans are designed to get money into citizens’ hands, so that they can in turn go spend and help jump start the economy. In this case, the economy was doing fine, until the U.S. found itself a little behind in their response to the COVID-19 pandemic. The US went from barely a dozen cases at the end of February to several hundreds of thousands of cases just four weeks later. Somewhere in the middle of all of that, sporting events stopped, music tours were rescheduled, festivals and business conferences cancelled; students were sent home for online learning, “non-essential” businesses were closed, people stopped flying, and social distancing prevented even small coffee shops, restaurants, and boutique retail from remaining open. As of mid-April, there are almost 750,000 confirmed COVID-19 cases in the U.S., and over 22 million Americans have filed for unemployment.

This is not normal. And we may not see normal for many months to come; if ever. So we need to stop treating our finances as if we have any guarantees for what happens next. Not that we ever did.

So, to spend or not to spend?

Given the uncertainty of our future life without a vaccine for this virus happening before 2021 — with or without lifted stay at home orders — it doesn’t seem plausible that the economy and American life, in general, will return to the pre-Coronavirus, pre-March time period. So any level of careless spending, even spending for something that might otherwise seem sensible (i.e. paying off credit card debt) to me seems to be a little risky in this environment.

There are people waiting for their unemployment check today who may have had a very different view of those benefits when they had a job and never thought they would need it. Small business owners may never be able to reopen their businesses. Live events may be sidelined for another year. And some entrepreneurs and contract workers are visiting their local food banks for the first in their lives.

It’s our new normal. Even if it is temporary. And adjusting your life to your new normal will require some work, planning, and discipline. But it can be accomplished.

If you’re one of the fortunate ones who still has a paycheck, then why not try to accomplish both things — continue paying off your credit card, while at the same time, open up a savings account and start putting money away. I would go one step further. Look at your spending habits and see if there are other ways you might be able to save money. Ask yourself, are there things you can give up for a few months — cable television, movie and/or music streaming services, Amazon prime, etc.? Can you put off replacing that sofa, do you really need those new shoes, are you still ordering out more than you’re cooking in? 

And what about your grocery bill? Are you utilizing coupons and reward programs, making a shopping list in advance, and resisting those impulse purchase buys that can raise your grocery bill by 5, 10, 15 or more dollars that you weren’t expecting to spend?

There are lots of ways and places where most of us can save money, if we try. If you haven’t taken this area of your life seriously in the past, now might be a good time to create new habits to get through what might be ahead now, or even what could happen later, regardless of a virus.

 

How the Last Recession Prepared Me for the One that’s Coming

It’s been a while since I’ve had the time to check in. To say that this Spring has been among the strangest, and one of the most unexpected time in our lives, would be an understatement.

It’s been about eight years since I started this blog; just a few years after being forced to adjust my life to a new normal. Like so many people who are dealing with that today, the recession of 12 years sent the economy tanking, the housing market tumbling, small businesses closing, and corporations downsizing. Massive layoffs, unemployment, company bankruptcies, house foreclosures, and lots of uncertainty. And even as we slowly came out of it, thousands of people remained underemployed for years after; having to learn how to live with their new career and smaller salaries.

Millennials graduated into a shaky economy, where they struggled to find jobs, or accepted ones far less than the salary they expected their college degrees to help secure. Some of their Baby Boomer parents never found new employment (ageism), while many Generation Xers had to transition into positions far less than their expertise, prior experience, and career positions had previously demanded. We were all in this together; trying to figure things out, move forward, stabilize the economy, and get back to as close to normal as possible. 

And we did. We succeeded.

It was painful, and a lot of what was, would never be again. But the economy came back. Jobs came back. New small businesses emerged. Entrepreneurship grew. We survived.

But here we are again. This time dealing with something much bigger than the loss of a job or home. We’re being thrust into a new normal where we must deal with that and the ever increasing, globally impacted, loss of life in this pandemic they call COVID-19.

There is an old saying that Handsight’s 20/20. But I think Foresight can be as well; especially when you start to see familiar signs; warning bells.

One of the things my four years in the last recession taught me was the importance of planning and preparation.

Planning is creating a type of road map that outlines what you will do in an emergency, or when you see a catastrophe (natural or financial) heading your way. It’s what children learn in school from the fire department when they ask every to create a fire escape plan at home. In Public Relations, we call them crisis management plans which outlines what a company or organization should do in the event of a crisis. If they follow the plan, it usually helps them get through the crisis without stumbling and causing more harm.

Preparation is putting into action your plan, and collecting the resources needed. If the forecast is for a foot of snow in a place that barely receives an inch, then ask yourself, what do you need to do if you end up being “snowed in,” schools out, and you know you will be unable to get to work due to road conditions? A prepared person would probably grab the folders and files they need from their office so they can work from home; encourage their kids to bring their books home from school that day; and by all means, stop at the grocery store to pick up any items they have on the monthly shopping list, that they weren’t planning to do for another week. At home, someone preparing for a major snow storm might also take the time to check the batteries in their flashlights, pull out their candles or secondary light sources, and make sure all of the important devices are fully charged.

It’s too late to check for batteries once your power goes out. Or to realize your pantry is mostly empty, after the roads have closed. And yes, if you only have one pack of toilet paper in a house of four people, you should probably be mindful to pick up another one “just in case.”

About 10 million people applied for unemployment benefits, in the wake of the Coronavirus related layoffs, business closings, cancelled public events, and a volatile stock market. While a number of companies have instituted pay cuts to keep their employees. Rent, mortgages, groceries, medicines, utilities, and other bills are coming due, with many people lacking the funds to cover them.

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According to Bankrate’s Financial Security Index, nearly three in 10 (28 percent) U.S. adults have no emergency savings. One in four have a rainy day fund, but not enough money to cover three months’ worth of living expenses.

Sadly, there are a lot of Americans, literally working paycheck to paycheck, with no room in the month for emergencies or unexpected hits to their finances. This is a particularly difficult time for millions of people. But for many others; especially those who have always had a steady income, your habits, your lifestyle, and planning, or lack of planning, does still matter. What you have today doesn’t guarantee your tomorrow.

I’ve watched an industry I thought was invincible, screech to a grinding halt. And related companies institute pay cuts across the company. 

So what can you do now if you’re one of the people whose rainy day funds are not sufficient to cover you in the event you’re next to lose your job?

  • Stop spending frivolously.
  • Start saving immediately.
  • If you’re not already a coupon user, start shopping with them now.
  • Utilize rewards programs for groceries and gas to get extra savings.
  • If you don’t need it, don’t buy it!
  • Even as you desire to support local restaurants, limit how often you’re eating out.
  • Go through your bank statements searching for automatic withdraws, and stop the ones you don’t need/use. If your gym is closed right now, are they still charging you a monthly fee?
  • Get rid of duplicate services (do you really need both Hulu and Amazon movies; Spotify and Apple Music?). 

If you do not have a personal financial crisis plan, consider developing one now.

If the last recession taught us anything, it’s that what may have taken only months to get in to, took the majority of people and various industries years to climb back out. How are you preparing yourself now for the long-term?

 

 

Stop Stressing and Be More Confident with Your Life in 2020!

New Year’s Day, and I can’t believe it took me most of the day just to get the drawers and cabinets in my bathroom cleaned out and organized. Sure, I took a few texting and email breaks, and spent over an hour on the phone catching up with one of my BFFs! But I still did not expect it to take so long. Nor did I anticipate how much junk – outdated, expired, and almost empty containers of junk that was just shoved in the back of my cabinets and drawers.

I know I’m not the only one. I also know that one of the reasons people like me, and most likely you, put off taking on the chore of cleaning and organizing our homes, and even our lives, is because it all just seems so overwhelming.  This time of year often makes it even more daunting. So many “experts” on morning talk shows, columnists in newspapers, magazine articles, all talking about the many things we should be doing – personally and professionally — in order to be a “better person” and have a better year.

woman-lifting-two-dumbells-on-both-hands-in-front-of-mirror-1886487Get physically fit. Get healthier. Get financially secure. Get the house cleaned and organized. Travel more. Read the Bible in a year. Join a book club. Plant an organic garden. Raise chickens. And on and on and on. I mean who wouldn’t feel overwhelmed a bit; and confused about where to get started, and how to make most of it happen?!

When my sister shared a social media post titled 30 Challenges for 30 Days, asking me to join her in it, I replied within a split second — “NOPE!” The subtext of the headline noted: “That Will Make You a Better Person.” That extra message probably set me off more than the title. I don’t need to compete with someone, trying to accomplish so many things at the same time, all within some arbitrary time period, to prove I’m a better person! And I think that’s the trap we often fall into every year.

I am definitely a believer in doing things to make your life, your family, your home, and yourself better. But what those things are will be different for each person. And the priority of what’s most important to you now, versus what can wait, will differ. I mean I love pulling open my top bathroom drawer now and seeing how neat everything looks. I love finding what I need on sight; not having to shuffle a bunch of junk around, or getting ready to use some medical or cosmetic cream, only to find out that it expired six months earlier. But maybe your drawers are already organized the way you want them.

I decided early on that rather than trying to take a lot of things on at once, as if it wouldgold-ipad-beside-stylus-768473 even be possible to complete all of the things I need to do, while shopping better, eating better, working out every day, going to bed on time, and getting my budget in order, etc. etc. – you know the drill – I would instead choose tiny projects, like the bathroom cabinets, and just work on it until it was done (no pressured time limits) before moving on to the next one.

So, in preparing for and thinking about my life in 2020, I broke things down into four major areas:

  1. Personal Life
  2. Home Life
  3. Financial Life
  4. Professional Life

It feels much better to think about changes and improvements I can make to FOUR areas in my life, rather than trying to work on 30 or 40 different things at the same time! Obviously, each one of the areas have subparts to them. But keeping my focus on the big picture helps me to plan better on how to attack something in each one.

For the next few weeks, I’m going to be sharing some of the things I’ve done, and how I’m choosing to tackle them in my own life, project by project – baby steps to success. Some may be things you’re already doing, or there might be some things that inspire you to try to accomplish. Other things may be of no interest to you whatsoever. But the cool thing about a new year, and our efforts to make a new start, is that we each should start with looking at our own lives, and apply only those things that impact you directly. If it’s not something that’s at the top of your list; don’t do it.

By the way, on day two of the new year, I spent time tackling the desk in my bedroom. It’s not an “office” desk, where I do work. It’s a desk that I use to write notes, letters, journal, read, and occasionally, work on my blog. The problem was, like an unused piece of exercise equipment, my desk had become the place to toss things I didn’t want to deal with, file away; a convenient landing site for whatever! Getting through all of the desk drawers and cleaning off the top of the desk really made my day. No one’s going to see it except for me. But that’s the whole reason I did it. For me! And that should be your motivation as well.

What will make you and your life easier, happier, and more convenient? Go for it!