Coronavirus – Good Reason to Delay Planning?
With so much uncertainty surrounding the Coronavirus, how effective can long-term planning be during times like these?
Well, questions like that remind me of something a French philosopher Michel de Montaigne said over 500 years ago…
“My life has been filled with terrible misfortune; most of which never happened.”
(Well, actually, he said it in French, but you get the idea.)
That just goes to show you that worry is bi-lingual, transcontinental and never goes out of style.
For many of us, our automatic response to worry and crisis is to freeze. Not having a secure path clearly and directly in front of us, we stop…waiting for clarity and security to emerge, as if by magic, out of our delay.
And a brief delay in a moment of panic, emergency or crisis, well, that’s just fine. It’s actually inevitable. You need a moment (or a day, or a week….) to evaluate your new circumstances. What we must not do is give in to any ostrich-like inclination to bury our head in the sand and simply not look at the difficulties ahead.
Delay or denial will not make our problems (real or imagined) go away. Dealing with them gives us the best opportunity to survive and eventually to thrive.
In the case of financial matters, delay due to uncertainty may actually lead to disaster. When you’re insecure about any part of your future, the thing to do is not delay financial responsibility, but to deploy it.
The trick is in knowing which parts of your financially responsible plan you should prioritize. It does make a difference.
- Do not delay protection. If your financial evaluation shows that death, disability, or a protracted illness would sink your financial ship, don’t wait for the perfect time to address those issues. Work with an experienced professional to put in place legal and financial and insurance moats around your castle. Calamity doesn’t take a holiday just because there’s a crisis today and your future is looking hazy.
- Don’t delay dumb-debt reduction. If you’re worried about your paycheck stopping for a time, get your dumb-debt in the best shape possible. Eliminated would be nice. And by dumb-debt I mean the debt that you now have for buying something that you really didn’t need that’s now worth less (or maybe even worthless) – a lot less – than what you paid for it. Your home mortgage is probably not dumb-debt. Your credit card balance for last year’s wardrobe probably is. You’ll want as much of the dumb-debt out of your life as possible if your job comes to an abrupt end. That may mean selling some things to pay off your dumb-debt.
- Don’t delay significant savings. This is really the first cousin to the last point about getting out of dumb-debt. If you don’t have any dumb-debt – well, congratulations! You want to use those funds that you would have applied to the debt reduction to significant savings. In so-called “normal” times, I recommend 15% of annual income or more going to savings. If you’ve got concerns about your source of income temporarily getting cut off, you’ll want to make sure that your pool of resources is as deep as possible. Save aggressively, starting right now.
- Do postpone optional purchases. If you’re paying down debt and saving now, you’ll just be tearing down your work if you make unnecessary purchases at the same time. Of course, you’re going to have to spend money – that’s not the issue. The issue is making sure that you are protected and liquid going into any time of possible crisis.
The Coronavirus crisis is real. Nevertheless, we may worry about a lot of crisis fallout that never actually happens. There’s just no way to predict the future.
So, don’t let your worry devolve into delaying your deployment of commonsense financial decisions that need to be made and acted on right now.
That would be another real crisis.
Offering you Wisdom on Wealth, I’m Byron Moore.
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