- A strong boat will help weather the storm
- Preserve cash for emergencies only
- Trim the FAT
- Strong investment plan
- Increase Income
What we do with our finances right now will determine if we survive this crisis. First, let me explain, that I am not optimistic about our near-term economic future. We are in uncharted waters but hopefully you have been preparing for this. If you have followed the 10 principles, this would have helped to keep a strong, secure boat. Sure, the wind will be taken from the sails, we may even lose our anchor or end up with one oar but we must keep steering in the right direction and keep the boat floating. I got carried away with the nautical metaphors there but I think it does explain where we are right now.
In these uncertain times, we need to be hyper-careful how we manage our money. I believe that we may be heading towards a global economic depression. When both supply and demand decreases drastically, it can only lead to layoffs and decreased wages.
Here are my short-term plans.
Preserve the cash that you have. If you have cash in a bank account or savings account, maintain this as long as you can. This is not the best time to use that cash as a down payment on a house or to buy an expensive item.
Cut back on non-essential spending as much as possible. I am going to make a call on this; Netflix is now an essential spend. Most of our time will be spent indoors and our mental health is just as important as our economic health. Entertainment is needed to maintain a good mental health status. Apparently, even astronauts that are isolated in the IIS for long periods use Netflix to break the monotony. Apart from Netflix, try to cut back all other non-essential spending. In these trying times, it will be easy to start shopping online for items that are not essential, try to resist this urge as much as possible.
I have not and I will not sell any of my investments. Yes, my investments are down overall but that is just in numbers. I only lose money if I sell those investments. The temptation is there; I often think if I sell some shares now, I can buy them back after they drop another 20% or 30%. However, that would mean I would be trying to time the market, which has proven to be almost impossible – only 15% of fund managers are able to do it. So, I am going to leave that to the professionals. I am going stay strong and stick to my original plan, which is not sell my investments and keep buying on a regular basis. I am still buying now and getting the investments at a large discount. I am in this for the long run; I still have confidence in the markets in the long term, and I believe that they will eventually bounce back. It may take many, many years but they will come back. Capitalism cannot completely stop.
This is a great time to find a side hustle especially if it is online; I have a list of possible side hustles here. We want to increase our income as much as possible to give us a buffer zone. Even if it only brings in a €50 – €100 per month, it will help to maintain cash flow.
