Financial Stability in Times of Crisis

These are uncertain times. Fear of sickness and fear of financial ruin abound. Many people across the globe are in quarantine. Many are staying home as suggested not for themselves but for the sake of all those at risk. They are doing their part to slow the spread of disease. They are selfless individuals willing to sacrifice even to save a few that they may not know. The slower this spreads the fewer people at a time will need intensive care. It is for them we stay home now.

How does this all impact travelers like us who are full-time nomads? How do the falling markets impact those who retired early?

What to do while you’re practicing social distancing (Thank you by the way for your sacrifice)

Free online learning offered now:

  • Education: Take one or more of the 450 Ivy League courses currently being offered for free
  • Enroll in the ChooseFI Academy and increase your understanding of personal finance – maybe even start your own journey towards financial independence.

Do some virtual travel:

  • Travel Australia or South America with us, see “destinations” in the menu above
  • Do a virtual tour of Six Italian Museums
  • Go to Google Earth and travel through a few national parks
  • Plan your next vacation. Dreaming is a beautiful thing
  • Distract yourself with videos from one of my favorite fellow travelers from Travel is Life

Financial Planning:

Whether your are currently living paycheck to paycheck or already in retirement, if you want to improve and learn more about how to handle money better, then enroll in the ChooseFI Academy for free. Below is my one tip for today on the art of waiting that I mentioned in the video above.

The Art of Waiting

Fear of job loss is real if you live from paycheck to paycheck. To reduce or even eliminate that fear, the cycle has to be broken. Our paths are all different, but one single thing that can make a difference in each person’s financial future is the art of waiting.

Waiting to Purchase

According to the Federal Reserve the average interest rate for loans on furniture is 10.31%. This means that a loan of $5,000 for furniture paid off in two years results in over $8,000 worth of interest paid.  That means that the consumer would have paid a total of $13,000 for that furniture!

If the same consumer waited (and sat on the floor for the time being) and made those same payments to himself, he could pay cash after only eight months. If he continues to make those same payments to himself for the duration of the two years, he will have $17,500 in his bank account. 

Choice: Buy Now or WaitTotal payment for furnitureSavings (2% interest) at the end of two years
Buy Now – take out a loan and have the furniture now$13,367$0
Wait – Sit on the floor for eight months and then pay cash$5,000$17,842

Loans make the poor poorer.  I understand that sometimes debt is necessary. It is extremely difficult to change this spiral. It is okay to ask for help from others to organize your finances. In fact, it is extremely helpful to join online or in person (after the quarantine is over) groups who desire to also get out of debt.

The key point of this illustration is that if you can wait to purchase non-essential items you can move your finances past the tipping point where you are able to save and start paying cash for consumables.  Once you are able to start paying cash, the savings will compound exponentially.

Re-evaluate your need

Even if you have to live in an apartment with no furniture or eat rice and beans for a short time, do whatever it takes to get past the tipping point.  When you have enough in savings you won’t be forced to take a loan when something breaks and won’t have to pay almost double the purchase price because of compounding interest.

Getting out of debt reduces fear (real fear, not just imagined).  It is a huge relief knowing that you can go without work for a short time and not lose everything you have or be taken to collections. In calmer times it also lets you say goodbye to a boss who does not have your back.

If you are in debt and feeling discouraged by it, please know that this is the most difficult step towards financial independence.  It is hard to get out of debt, it truly is, and it feels sometimes like it takes forever. But once you get past the debt cycle, it gets easier and the savings build faster.

Join a group to help encourage you along the way.  Women, I highly suggest Women’s Personal Finance. It is a very supportive group of women in a forum that is well moderated. In other words, the trolls are kicked out.  It is a safe place to get encouragement and financial advice.

See also, the Mindset of Financial Independence and Three Keys to Reinventing Your Life.

Most Important Activity

Lastly, take the time to tell someone today how much you love them. Every learning course and every mindless activity is worthless without each other. Call a loved one on the phone and talk then call an old friend. Strengthening relationships is the most important door of opportunity that we can open.

Note: If you click on our product links, 43BlueDoors will receive a small commission on anything you purchase within that session- at no additional cost to you. 43BlueDoors donates all net proceeds to support freedom for young girls rescued from human trafficking.

7 thoughts on “Financial Stability in Times of Crisis”

  1. Excellent blog. Enjoyed hearing how you are doing. Great tips on finance. And as an aside, LOVE your ring. Trin, you’re crazy. Lol


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