Personal Tips and Tricks for Surviving a Pandemic-Recession

While not my typical genre, I think it might be helpful to some to consolidate and pass on some tips I’ve learned from some of the personal finance influencers I follow — and a few insights of my own.

FWIW: I have no formal training in finance. I write based on my own experience, and my training as a minister (money comes up a lot!). Also, reading about personal finance is a bit of a hobby, so I am also synthesizing some of what I have learned.

This is a random picture of a dollar as a shirt. Credit Rob Lee on Flickr.

One of the biggest problems I find with many financial advice gurus is that they often give a ‘one size fits all’ approach. Anything I recommend here should be tailored to your particular situation, your particular values, and your goals.

So, without further ado, my personal personal finance tips for a pandemic.

Make a worst-case scenario budget.

Identify your non-negotiable expenses, both fixed (rent, minimum payments on debts) and variable (food, etc). What would your monthly budget look like if you lost your job and had to cut out everything unnecessary?

Be conservative by assuming high expenses for things like food. Hopefully in reality you can cut down on variable expenses, but that’s easier said than done, especially if you have to navigate issues like inconsistent inventory at grocery stores. Assume those costs remain consistent so you can save sufficiently.

My spouse and I call this our ‘World On Fire’ budget, which we have in a spreadsheet in a shared Google Drive.

Don’t forget that in dire times you will no longer be saving or investing, so you can cut those from your worst-case scenario budget.

Now, compare your ‘worst case scenario’ monthly expenses to your emergency savings. How many months could you last based on what you currently have saved up? Maybe none? I’ll come back to that.

Make a (tentative) plan for other changes you might make in a crisis.

Would you consider moving in with family? Would you un-enroll your kids from private school? Would you give up your cell phone or internet access or your car? Talk through these decisions with your partner ahead of time. Don’t inappropriately burden your kids, but they should have some participation in such conversations. These should be collaborative decisions and should be on your whole family’s radar before the situation arises. Nothing could be more detrimental to healthy family life than one person making unilateral decisions and springing them on everyone else in a crisis.

Talk to immediate relatives…

….who may depend on you (or you on them) in a crisis. If they are open to the conversation, try and get a sense of their financial vulnerabilities and situation. Are they at risk of losing their job? Do they have any savings? What’s their plan if the worst should happen? Consider what responsibility you might have to help out family members in a crisis. Communicate about this now before it becomes a reality.

Have this same conversation with those you may need to depend upon. Let them know concerns you might have about your own situation, and ask whether and if they would be willing to help out if the worst should happen.

(Again, as appropriate to your situation. If you have worked hard to maintain boundaries from over-involved or abusive relatives, for example, don’t give those up unless you feel safe and comfortable doing so).

Make your emergency savings more robust.

Some financial advice gurus recommend having only $1,000 of savings until you are free of debt. I think this is unrealistic and, frankly, dangerous. Dave Ramsey particularly touts this idea. To be fair, he does teach that people should amend this rule when costly life changes are imminent (risk of job-loss, pregnancy, etc.). However, I think it’s too late if you wait until an emergency is looming (or happening!) to save more for an emergency. If you unexpectedly lose your job, $1,000 is not going to get you very far. A paid-off credit card won’t pay your rent or mortgage.

Heck, $1,000 will hardly pay a moderate car repair bill.

(Also, if you do not have a credit card at all, get one, just in case of an emergency).

I mean, this is sort of a ‘do as I say not as I do’ moment. It took me a while to shift my thinking away from Dave’s philosophy. But, personally, I would aim to at least have two months-worth of bare minimum expenses saved up before seriously tackling debts, especially in these uncertain times. If things improve in a few months you can use some of it on debt later.

My lay-person’s personal tips to accomplish this:

1. Stop paying extra on debts. Pay only your minimum payments.The one caveat I might add is that if you have a card you are close to paying off, and feel relatively financially secure otherwise, you might still consider trying to pay that off sooner than later just to get it (and that pesky minimum payment) off your back.
2. Consolidate your credit cards in order to reduce your minimum payments. If your credit card debt is spread out over several cards that all have interest, you might consider applying for a balance transfer card with an introductory no-interest period that you can use to consolidate two or more cards. With no interest, your minimum payment per amount of debt will decrease by combining them into a no-interest card. This will free up some room in your budget that you can put toward emergency savings/will reduce your expenditures in a worst case scenario. (Check out this tool at Nerd Wallet.com, and filter for Balance Transfer cards to find one). One warning: When interest does kick back in, these cards might sometimes charge a higher interest rate, so I would only do this if you feel reasonably confident you can pay it all off before the free interest period is up. Or at least just calculate whether or not the potential cost of higher interest later is, to you, worth what you are saving now in lower minimum payments. You may find it worthwhile to take that risk simply because you want the peace of mind of saving up extra cash now, which is valid in my mind. A second warning: Some balance transfer cards charge a one-time fee to transfer the balance. Be aware of this in calculating the cost/benefit to you. It might be worth it if you are going to save on 12–18 months of interest charges.
3. Be sure to set aside and save cash from things you’re not doing during social distancing anyway, like going out to eat, commuting, etc. Consider how much money you typically spend on those and put directly into savings.
4. Cut expenses. For many people, this could be a frustrating, even insulting, suggestion. Many of you already cut your expenses as much as you can, by necessity. And I’m not the sort who thinks that your Starbucks habit is what is keeping you from buying a house, etc. However, there are countless resources to help you find small ways here and there to reduce expenses and are worth perusing if you have any margin, and small changes can make some helpful differences in your bottom-line. PennyHoarder.com has some good resources. Also, check out a new app (created by a relative, full disclosure) I am loving right now, Twilight — a new app that gives you personalized tips to save money based on your spending habits and values.
5. Take advantage of options the government and various banks are starting to roll out for deferring student loan payments, mortgage payments, etc (more info below). If you qualify for any of these programs, go ahead and take advantage of them now even if you haven’t lost your job or anything, so that you can save the cash ahead of time. Just make sure you ask lots of questions about whether there are any penalties or impacts to your credit report by taking any of these options.

[BUT REALLY THOUGH. So many people have missed the news that, as of March 20, the federal government has said that you can skip your student loan payments for at least 60 days. But you have to call your loan servicer and request this temporary forbearance. DON’T SLEEP ON THIS. See in Forbes].

Shop

Do not hoard or panic-buy, but if you can try and buy supplies with the idea that you will have to spend long stretches of time inside, and in order avoid making extra trips to the store. If someone in your household gets the virus, you will all have to stay inside for 14 days. Think about what you would want to have handy if you are stuck inside for 14 days (food, Tylenol, prescriptions, electrolyte drinks, etc.). I love the FlavCity Youtube channel for great tips on healthy ways to stock up.

Eat Healthy

Obviously, do what is within your means, but I do not recommend giving up eating healthy to save money. Don’t (only) buy processed and canned foods, or plan to subsist on rice and frozen pizzas. Obviously, you need a good supply of non-perishables (and many can be quite healthy!), but you should get some fresh (ideally, organic) fruits and vegetables whenever you are able. We all need to be keeping our health on the up and up. Investing in healthy food is an investment in your financial future.

Pro Tip: Try looking for long-lasting produce. These items are cheap, healthy, and last a long time: Butternut squash, potatoes, avocados (when refrigerated, can last a few weeks), citrus fruits, yucca, etc.

Also buy some beer and ice cream and don’t look back.

Take Advantage of Relief Provisions

If you lose your job or are otherwise financially impacted because of the virus (even if indirectly), call all your lenders, and perhaps your landlord. Some banks are offering various benefits for people who are suffering because of the crisis. Student loan services are forbearance or deferment, per the federal government. Your landlord may be willing to work out an arrangement with you.

My bank, Ally, just announced they are not charging minimum payments on mortgages for 120 days for those impacted by the virus.

Take advantage of any programs like this that you can, as long as they don’t have any negative consequences on your credit or later payments.

Invest. Maybe.

IF you have a robust emergency savings, and IF your debts are under control, invest. I do not, like Dave Ramsey or Suze Orman, think you need to be entirely debt-free to invest, but you should be in a place that your minimum debt payments are a manageable part of your budget. Now is a good time to invest in the stock market. Add more to your IRA, for example. I get this tip mainly from @InvestingwithRose, who has amazing and easy to understand resources on investing.

If you don’t know where to begin with investing, start with an app like Acorns, or seek out a financial advisor. Here’s some tips on how to look for one.

Give. Definitely.

My temptation, as I’m sure is the same for many of you, is to live out of fear in times like these. I am inclined to hoard rather than to be generous. But this is the time when our neighbors (locally and globally) will greatly depend on the generosity of others.

While I don’t believe in giving in order to receive, I do believe that stepping out in faith with a posture of generosity will lead to our own blessing. We can choose to create a culture of generosity by acting generously, and we may depend on that culture of generosity in our times of need.

Give to your local food bank, donate blood, maybe join the YMCA (many YMCA gyms are closed, but membership fees often go toward feeding food-insecure students currently out of school — at least that’s the case here in the Boston area).

Also, if able, order takeout and tip generously to support your local businesses and gig-economy workers!

Take a Deep Breath

In all things, continue to care for your mental and emotional health as much as you are able. You won’t be able to take care of your family or your community without caring for yourself. You will make better decisions in a crisis if you develop and maintain habits that ground and center you. For me, this means trying to keep a practice of meditation, yoga, or taking (socially distant!) walks outside. Develop these rhythms now, hold on to them in times of crisis, and it will help you weather the storms — financial or otherwise.