Financial serenity in the midst of turmoil

As of March 2020, the COVID-19 pandemic is still ramping up in the United States.  Testing measures are slowly ramping up, so we’ll be expecting more of a jump in affected individuals over the next few weeks.  It’s important for all of us to do our part and limit the rate of transmission so our healthcare facilities do not become overwhelmed.

Obviously the stock market and economy is taking a nosedive.  Some people might even say that it’s a bottomless pit.  Will it be the worst in history? Does that even matter?  The healthcare sector will always need doctors, but this doesn’t mean that our incomes won’t take a beating.  Many of us still have loans, mortgages, and bills to pay.  The 10% drop in our investments will hopefully recover by the time we retire, but the red down arrows on our statements still hurts.  However, now is the time for us to reassess our financial plan and ensure that we are making appropriate choices.

Focus on what you can control
Remember, I’s and O’s—that’s all there is to it. Renal function, net worth…it’s one of the same.  You can control how much you spend.  This is where having a recurring monthly lawn bill of $1000 (yes, that is more common than you think), cellphone and internet bill of $600, and $150 per dog grooming bill is going to start hurting you.  Sure, it is doable if you have multiple income streams from your rental properties, but what if your tenants start to default on rent? What if your plastic surgery aesthetic center drops its volume by 90%?

Find peace in world of turmoil.

This is where ultra-savers butt heads with the ultra-earners.  There are people who would prefer to clip coupons rather than find ways to increase income to get rich.  Guess what? You could do both.  Sometimes there are no coupons in the weekly mail, but there is someone waiting to give you their money.  When no one is waiting to give you their money, clipping coupons is the only option.
Now is a good time to assess what our expenses are and decide how modifying them would impact our daily lives or our financial future.  I dislike nitpicking on details that might not make a long-term difference, but many of us are also working in the front lines are also at greatest risk of developing illness from our jobs.  If we are sick and can’t do our jobs we will not have an income.  It would behoove us to reduce our recurring costs in the short-term if that will provide a sturdier financial buffer.

Stick to your financial plan
When a large percentage of your investments go to pot, it’s normal to want to change the plan.  However, selling your stocks at the bottom of the market or selling your real estate in a buyer’s market is the easiest way to lose the long game.  There is no reason to sell low unless you are cash-strapped and have no other way to pay your bills.  The more level-headed approach when there is global financial downturn is to review your financial plan.  Now is the time to rebalance your portfolio if the change exceeds your thresholds.  If you don’t have a financial plan, now is the best time to create one!  If your tenants are asking for deferred payments, figure out what is reasonable in order to make the situation work.  You don’t want them to default, but you also don’t want to go bankrupt being a nice guy. 

Now is also the time to negotiate with your creditors too, especially if you are a small business owner.  If you own your medical practice, now is the time to see what your landlord can do for you in times of financial crisis.  As a doctor, you are likely going to be the most reliable tenant the landlord will have.  They should do whatever they can in order to help you out.  Likewise, now is the time to see what loans you can defer, what vendors you can postpone payments (electronic health record, maintenance…etc). 

Ride the wave

The winner is always the last person standing.  Remember that these economic troughs will eventually become a peak.  The game plan is to outlast the trough.  

Stay safe everyone!

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