Personal finances during a crisis

Many people have already lost their jobs during this coronavirus crisis. Others are working reduced hours. State and local governments are trying to take steps to provide temporary jobs and/or financial assistance during this time. The Federal government is trying to put together a program that would mail checks to most Americans, but as usual they are playing politics while the nation is in a financial crisis. If there is anything we as a nation should have learned over the past few years is that many of the people we elect to national office could care less about the country and the people who put them in office. Their only concern is amassing personal wealth and taking care of their financial supporters. I would remind people that there is an election coming up, but regardless of how much we complain about the work Congress does, we continue to re-elect the same people to office. As someone once said, a people gets the government they deserve.

However, this post is not about the failure of government. It’s about personal financial management. No doubt this coronavirus caught everyone by surprise. The economy was booming. The stock market kept setting new records. Things were going really great, and then boom, the bottom fell out.

Immediately, people became concerned about paying their rent and mortgage payments, being able to make their credit card payments and auto loans. They wondered if they had enough food, and then went out and horded toilet paper. It appears many of us didn’t learn a thing from 2008.

There will always be economic downturns. Some will be unexpected like this one while others will be normal corrections, which we were probably due to experience soon before this situation hit. Anyone who studies economics knows there are ups and downs in the financial world. The key is to prepare for the downs during the ups, and you can’t do that if you are spending more than you are making each month.

For years I thought I had to buy a new car. My argument was that I am not a mechanic and didn’t want to buy someone else’s problems. I always had auto loans, often two of them. After 2008 I decided I would never have another car loan. A couple of years ago I told my wife our three vehicles had nearly 600,00 miles on them, and it was probably time to start replacing them. We had been saving our money and was able to replace the one she drove with one that was two years old that we paid for with cash. A year later I gave the car I drove to our daughter after their car was totaled and bought me a used pick-up, again with cash. Please understand, we are not wealthy. Not even close, but when you do not have credit card debt and car loans you can save money, if you will, to buy your vehicles with cash. For years I bought cars I could not afford but never again.

We paid off our credit cards after 2008 as well. It’s a great feeling to walk in the credit union and have the person waiting on me ask if I want to hear how I can save money by consolidating my debt and be able to tell them that I have no debt to consolidate. When you have no debt it makes life so much easier when the economy declines. We have only a mortgage, and three years ago we redid it and knocked three years off our payments and reduced our interest rate by 2 percent.

The other thing after 2008 we did was follow Dave Ramsey’s advice and created a six-month emergency fund. This puts six months of expenses in a savings account so when things like this happens we have a buffer to fall back on. If you struggle with personal finances I highly recommend his book The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness. It will give you clear steps for getting out of debt, how to make wise financial decisions and how to prepare for retirement.

I am not sharing this to brag. When the financial downturn hit in 2008 it created a lot of problems and sleepless nights for us. I was determined to not experience that again. Since what I had been doing was obviously not working I had to find something that would, and that was when I found Ramsey’s plan. No one knows how long our current situation will last so we’re being very cautious with our finances, but at least I can sleep nights.

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