Facts, not Fear

Updated: Apr 30, 2020

What to do with your money during Covid 19
Covid 19 pandemic

What to do right now, and what to do when the worst is over.

The COVID 19 pandemic of 2020 will go down in history as one of the most significant negative worldwide events ever, mainly due to the universal effects it is having on everyone, regardless of whether the infection itself touches anyone close to them.

At this point in time the estimates are that total deaths in the U.S. may reach 100,000 or more, which would be double to triple the annual deaths from the seasonal flu. But the economic effects are enormous and all 330 million U.S. residents will be impacted to some extent.

So what can you do to protect your own finances, present and future, at a time like this?

First of all, remember that facts are your friends, and fear is your enemy. Facts help you make good decisions. Fear causes you to make bad decisions, every time. And the facts that should matter most to you are those that are true for YOU and your family, not national statistics. So evaluate YOUR particular financial situation, for example:

  • Have you lost income? Or is there a reasonable chance that you will?

  • Are you in debt at all?

  • Do you have savings and investments?

On the basis of those answers, you should be able to put yourself into one of these four categories:

  1. You’ve lost your job or your business has been shut down, and you have no income. Think waiters and waitresses, hairdressers, manufacturing jobs in nonessential industries, and the like.

  2. You’ve still got your income, but the nature of your job or business means that losing income is fairly likely. Jobs like real estate agents, or those in advertising. Just because you can work from home doesn’t mean that demand for your product or service will continue long term.

  3. You’ve still got your income, but the nature of your job or business is essential and your income will not drop, in fact it might even increase. You are running , or working in, a grocery store, health care, trucking or some other essential service.

  4. You’re doing fantastic, maybe you’re retired, or if you’re working there’s no fear of losing income, and you’ve got no debt and significant amounts in savings and investments.

So here’s what to do, and what to focus on, for each of those 4 categories:

1. You’ve lost your income

Suddenly you are in a storm, so go into storm mode.

That means that FIRST and FOREMOST you take care of what we call the FOUR WALLS: Food, shelter, utilities and transportation. Stop all other spending until you know that you have these four taken care of.

  • Food on the table (groceries, not eating out, even delivery) comes before anything. You must feed your family and nothing else matters if you aren’t doing that.

  • Then make your basic utility payments: lights, heat and water. That doesn’t include the cable bill or internet, not yet, anyway.

  • Then pay your rent or mortgage. Contact your landlord or mortgage lender to see if they have relaxed requirements in light of this crisis, if you can't make the payment.

  • And transportation...keep gas in the car, make the loan payment if necessary and keep it insured.

If you can do that much, nothing else matters. NOTHING.

If you have enough to make your minimum debt payments, you can, but it’s also OK to not pay your credit card at all until you know for sure that you’ll be getting some unemployment benefits or other money. If there’s any doubt, hang onto as much money as possible.

Likewise contact your creditors about your situation. You’ll get grace extended during a time like this when you wouldn’t during ordinary circumstances.