Despite having a list of over 50 topics that I’d like to cover in this blog (ranging from “the 4% rule of retirement” to “love and friendship”), I feel drawn these days to talk about just one.  As I sit here, not having left my home for three weeks for much beyond a walk and a grocery store visit, it’s impossible to ignore the impact that this coronavirus has had on the day-to-day routine.  After all, when was the last time it was so difficult to buy Purell, toilet paper, or even rice (perhaps the most plentiful food in existence).  Let’s not even talk about the hour-long lines at the grocery stores that wrap around the isles. 

The impact of COVID-19 is very real and the future remains uncertain.  We should be as prepared for this to end in 12 days, as we are prepared 12 weeks, or even 12 months.

I won’t attempt to provide health or social guidance (you can find the latest from the CDC here). Rather, let’s take a moment to ensure we’re as prepared as we possibly can be for the financial impact of the virus.

Here’s TheCentsei’s 10-step financial survival guide during a pandemic:

1)  Do Not Panic – Take Control

A sudden risk of loss of income, coupled with increasing economic uncertainty for the future can be very traumatic.  These factors – intensified by the news cycle – can often give way to fear, panic, or dismay.  Society will indeed change in some ways, and that uncertainty is scary.

First and foremost, know that none of this is your fault and that you do have the strength to improve your situation.  Stress is a natural feeling, but you can mitigate it by taking actions to manage things that are in your control.  Revisiting your budget, applying for a job, calling a lender, eliminating a recurring expense, planning a meal, getting some exercise, or finishing an overdue task are all ways you can exert some control over your financial situation.  If you’re feeling a moment of stress, consider reacting by taking just 5 minutes to do something productive to counteract it.

As for everything we can’t control, we can find ways to manager our reaction.  There is an abundance of research indicating that mindfulness can a helpful way to cope.  There are several free podcasts and apps to help.  To get started, Headspace is a mindfulness and meditation app that has free content during the outbreak. The sessions are brief and the approach is relatable.

As a society, we will heal.  As individuals, we will remain in control of our destiny.

2)  Review Your Possible Government Benefits

Here in the United States, the federal government recently announced the CARES Act, a plan to give most people and businesses some much-needed relief during the onset of the virus.  The core of the bill from an individual’s perspective is a one-time $1,200 payment to help every adult making less than $75,000, with an additional $500 per child.  Also, unemployment benefits are boosted by $600 per week.  The bill also offers small businesses the opportunity for a forgivable “loan” to be used to keep employees on payroll.  Finally, all payments of principal and interest for certain federal student loans are suspended, and federally backed mortgages (most are this way) must grant loan modifications, without penalty, if the borrower has a request for financial hardship.  Many states are offering additional programs, as are other countries outside the U.S.  Take advantage of these!

The government certainly wants you to spend your stimulus check, and if you have absolute essentials that aren’t going to get paid, of course you should devote money to that first.  However, I strongly encourage you to build up your emergency fund as soon as possible, whether you receive a government payment or not.  Even if your job currently feels safe, the truth is that you never know when you’ll need it.

3)  Revise Your Budget

If you don’t have a budget, what better time to create one than when you’re stuck at home.  If you do have a budget, consider creating a version that fit your expectations during stay-at-home recommendations or quarantine.  For example, our budget is going to have changes like (a) Gasoline down 80% since we aren’t driving, (b) groceries up 50% because we are eating three meals a day at home, (c) restaurants down 75% since we aren’t eating out, (d) utilities up 33% since we are at home Mon-Fri during the day now, (e) gym expense down 100%, and (f) toilet paper usage up 200% – just kidding… or am I?!  Your budget should have similar adjustments, maybe for childcare, healthcare, or entertainment, depending on your situation.  Knowing where all your money is going can offer a huge sense of relief for those who might normally get a feeling of dread thinking about the future.

4)  Update Your Resume And References

At least 3% of Americans have already lost their jobs, and some estimates say that another 10-15% more could lose their jobs in a worse-case scenario.  Get a leg up on your next job search by updating your resume and calling your references today.  Having everything in order could save you a day or even a week if you were to lose your job and be the difference between landing the next job that much sooner.  Even if you keep your job, you might be able to leverage the updated resume for future opportunities. On a similar note, consider how you might generate some alternative sources of income as well.

5)  Maintain Your Physical Health

Sheltering at home for extended periods of time will require changes to your health habits.  Shopping with a grocery list, scheduling meals (and snacks), taking a daily walk/run, building a new exercise routing, drinking plenty of water, and washing your hands are all new routines that you will have to incorporate into your day to maintain your health.  Make sure you and your children’s vaccinations are up to date as well.

6)  Contact Your Creditors

If the virus is having a significant impact on your ability to pay your loans, you may be entitled to assistance.  Your debt probably won’t be forgiven, but you may be entitled to waived late fees, “interest only” payments for one or more months, a loan extension, or a similar offering from your lender.  Your financial institution probably won’t give this to you automatically, so take the time to give them a call.  NerdWallet recently posted an article outlining what to do with many national banks, and smaller locals banks often have similar programs.  In the U.S., federal student loans will automatically receive a six month forbearance starting March 13^th and ending September 30^th, meaning no payments are due and no interest will accrue (part of the CARES Act).  Log into your student loan account to make sure they didn’t make a mistake.  These programs generally do not affect your credit history, though confirm with the lender to be sure.  Finally, your landlord, utility companies, medical billers, and other “creditors” may be willing to work with you and come up with a plan.

7)  Stay Remotely Connected To Loved Ones

With little more than an internet connection, you can stay in touch with your family and friends.  Services like Zoom, GoToMeeting, FaceTime, Skype, WhatsApp, Houseparty, and Discord all offer video calls with other people using the app, and all are available on either a laptop, tablet, or smartphone.  Virtually all are free to use, though some offer a premium version for a fee.  I’ve used all seven over the last three weeks and would recommend any.  If you want to have some fun while you’re at it, you can play a board game, enjoy some appetizers and wine, or even watch Netflix with your friends remotely.

8)  Limit Media Consumption; Disconnect From Social Media

Limit your daily media consumption and stick to reputable sources only.  No Wonkette.  No InfoWars.  No talking heads.  NPR’s “Up First” podcast is the best in this regard that I could find: factual and not emotional.  I also recommend disconnecting from social media entirely, as I did five months ago without a single regret.  You will never improve your life as a result of social media use.  As a quick side story, we had a relative recently call us in a panic because they read… on Facebook… that China created the virus to start a biological world war.  We then reminded them that the virus started in China, killing hundreds of Chinese citizens before spreading to other countries, so it made no sense that China would be trying to use it as a weapon.  It is critical to avoid this misinformation.

9)  Stay Properly Insured

Now, more than ever, it’s important to verify you are properly insured against possible losses.  Review your exact coverage limits and terms to confirm they are in line with your needs.  Avoid being overinsured or underinsured.  My rule of thumb is that you should always have insurance on important things that you could not afford to pay for or replace in cash.  Health insurance?  Absolutely.  Home insurance?  Yes!  Auto liability insurance?  Always.  Auto collision?  Only if your car is still worth more than one month’s gross pay.  Renter’s insurance?  Maybe, if you own legitimately expensive things that would be costly to replace.  Term life insurance?  Let’s talk about this one in another article, but generally yes if you have young children or a non-working spouse.  Whole life insurance?  Generally, no.  Cell phone insurance?  No.  Insurance on your $30 gadget?  Heck no!

10)  Don’t Overreact To Changes In The Market

We all know the maxim for investing: buy low, sell high.  Yet, when we see our investments in free fall, human instinct tells us to sell.  Don’t fall into this trap and try to remember a few things. 

– First: “Time in the market always beats timing the market,” so stick to your weekly or monthly retirement contributions if you can.  It remains true that the longer your investments stay in the market, the more value they will gain over time, on average.

– Second: The stock market reflects far more irrational emotions than it does actual economic productivity, such as fear (when stock prices go down) and excitement (when stock prices go up). 

– Third: You can’t lose money unless you bought at the peak a few weeks ago and sold at the bottom.  Especially if you’re retired or close to retirement, do not panic and sell off everything now, after it’s lost so much value.  Trust that your long-term strategy will work.

Invest steadily and consistently, in line with your risk tolerance.  A bad year should not alter your behavior.  You should always invest for the long-term, with an emphasis on low-cost mutual funds and EFT’s rather than individual stocks.  There has never been a 20-year period in our lifetimes where the market has lost value. 

Please consider commenting below (I will write back!) and sharing this or any article with your loved ones.  Stay healthy and stay safe!