The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger–but recognize the opportunity. ~John F. Kennedy.
The warning signs are everywhere: Lower GDP, higher unemployment, rising federal debt. The numbers are staggering, and it could be 2-3 years before America hits a financial recovery in stride. This is not a scare tactic, nor is it fear-mongering. Still, we face a stark reality.
What does that mean to you? Prepare! This is an opportunity to get your finances in shape and be ready for the coming financial pandemic.
Whether it manifests in the form of a recession or inflation, expect to see changes in the American economy through the rest of the year and probably into 2021. Are you ready for it?
Yes, these are unusual times, and you may be without steady or consistent income right now, but you can still do it. Success will require discipline, planning and determination, but you can weather the coming storm, even without depending on another stimulus check.
Before the pandemic breakout hit, financial advisors and leading analysts were predicting slight inflation. That would mean a reduction in purchasing power through the increase in the price of goods. With the unprecedented chaos of the past few months, the prognostications now range from depression to recession to inflation to a complete crash.
As I mentioned above, the warning signs abound. From growing government debt (where did you think those stimulus checks come from anyway?) to high unemployment and bickering (read: can’t get their act together) politicians, the handwriting is on the wall for some tough times.
So what can you do to prepare?
- First, recognize the coming storm.
- Despite all the pandemonium, the stock market is still quite high. The appearance is stable, but how reliable is it? Have we seen the bottom of the market?
- The House just approved a $3 trillion coronavirus bill, the fourth this year. It’s highly-partisan and will probably be DOA in the Senate. Still, you should expect some new package before the end of the month or possibly June. More debt.
- Unemployment is moving upward this month and could approach Depression-era levels before the summer is out. Moreover, it will remain in double digits well into next year!
- Stores that were just making it only a few months ago are now starting to go under (Penneys, Pier1, J. Crew, Neiman Marcus). Countless local and regional stores have closed their doors for good.
Meanwhile, back to you. What can you do to survive? Here’s a checklist of suggestions.
- Chip away at debt. Be deliberate, aggressive and specific. You may not be able to get entirely out of debt this year, but take a systematic stab at it and put every extra penny towards it. Tackle the lowest debt first (say a credit card or other installment note) and try to knock it out.
- In a perfect world, you should be out of debt before you move to this, but start to put aside an emergency fund. Stash away whatever you can. Sell something, that’s a quick way to start your fund. If you have the opportunity to work some hours or even an extra job, now is the time.
- Become frugal, slash wherever you can. Cut luxury spending wherever you can. Luxury, as in takeout/delivery, Starbucks, streaming, gym memberships. Check your cable bill and cell phone plan; often you can reduce those quickly with just one phone call. You have not because you ask not (I remember reading that somewhere before.)
- Learn to make some food items at home. You may be surprised at what you can make yourself! Here’s one list. And another. You can shave a little off the grocery bill and learn something too.
- Plant a small garden this summer. Even if you grow only tomatoes, cucumbers, eggplant, basil, you’re ahead of the game. Saving money and eating healthy!
Friends, this isn’t business as usual, and we aren’t close to returning to normalcy despite some excitement about re-opening the economy. The road ahead will be bumpy and perhaps hazardous at times. But if you plan ahead and prepare, then stick to your plan, you can avoid the pitfalls that will derail others.
But this is not a drill, it’s imperative to take action. Stay positive, be intentional and prepare meticulously.
You’ll never change your life until you change something you do daily. The secret of your success is found in your daily routine. ~John Maxwell.
Fear not, for I am with you; be not dismayed, for I am your God; I will strengthen you, I will help you, I will uphold you with my righteous right hand. ~Isaiah 41:10.
By failing to prepare, you are preparing to fail. ~Benjamin Franklin.
Do not be anxious about anything, but in everything by prayer and supplication with thanksgiving let your requests be made known to God. And the peace of God, which surpasses all understanding, will guard your hearts and your minds in Christ Jesus. ~Philippians 4:6-7.
Always remember you are braver than you believe, stronger than you seem, smarter than you think and twice as beautiful as you’ve ever imagined.” ~Dr. Seuss.
Hard times don’t create heroes. It is during the hard times when the ‘hero’ within us is revealed. ~Bob Riley
When you come to the end of your rope, tie a knot and hang on. ~Franklin D. Roosevelt