Reflecting on our current crisis

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                                                                      Bill’s Blog                     June 17, 2020

I have been pondering how our world has so rapidly changed, and some strategies for you to consider to have a more balanced and meaningful life.

Firstly, many loved ones have fallen to Covid-19 virus and the majority have been seniors. My heart goes out to the many people who have lost parents, grand-parents, family members and friends. These are challenging times and it reminds us that one of the most important aspects of life is family and good friends. If you know someone who has been affected, consider giving them a call, dropping off a meal or showing some other meaningful care and kindness.

Stay connected with family, friends and colleagues. Isolation can be deadly. It is important to connect with people regularly – and yes, respect the social distancing rules while they are in place. But get out… go for a walk or bike ride with a friend. As the social distancing rules  become less restrictive , have a friend or two over for a nice meal and have a good chat. Ask them, “How has this crisis has affected them?” To maintain a healthy mental state, we are designed to have regular interaction and fellowship with people.

Authorities have done many things well, but there are important lessons from this crisis. Hopefully, our governments and medical experts will do a better job protecting the most vulnerable among us if we have a second outbreak. They should:

  • close borders and restrict travel immediately.
  • only require the sick or very vulnerable people to be temporarily shut in/quarantined.
  • allow healthy people to continue working and providing for themselves and their families.

Otherwise, the financial implications may end up far more serious than the Covid 19 virus.

On a personal level, stay fit, do regular exercise, eat lots of vegetables and fruit daily which are loaded with antioxidants. Get a proper amount of sleep each night. Drink lots of water. Consider adding quality supplements – if you haven’t already – to build and maintain your immune system. This is your best defense against all disease. Consider taking vitamin D, C, probiotics, a high-quality multi-vitamin/mineral/antioxidant formula and fish oil as a start. Check with your health professional before you start to ensure these will not interfere with any medications you might be on.

It’s hard to believe that travel, trips, and cruises have come to a grinding fault for the foreseeable future. Don’t let this bum you out; be flexible and travel in your region. Enjoy nature and the uniqueness of your own community. Personally, I am blessed to live close to lakes, rivers, trails and many communities less than an hour’s drive. Hopefully this is similar for you. Try not to focus on what you don’t have, but enjoy and be grateful for what you do have. This creates a healthy and positive mindset.

Since this is a financial blog, I will conclude with several things to consider. Many people have been financially devastated by the global shutdown. We are clearly in a serious global recession based on all major indicators. Job losses are at record levels, debt delinquencies are growing weekly, and manufacturing and sales in many sectors have seriously declined. Companies are not reporting earnings or revealing the huge debt loads they are taking on to maintain the façade of growth.

Record levels of central bank and government debt are a very serious issue which will lead to inflation down the road. There is no free lunch with all of the fiscal stimulus and suppression of interest rates to near zero. Governments will have to raise taxes. It will become harder for retirees to maintain their lifestyle with near-zero returns on their savings. And pension funds are struggling to find yield to meet their obligations.

Most of this stuff we have very little control over, other than voting out poor governments. However, there are many things you can do personally to improve your own financial health. Have you looked at ways to cut your expenses? On a regular basis, I reflect on my budget and make adjustments. You can live on a lot less when you get rid of all the financial clutter which we often get trapped in. Hopefully, you have a basic budget and go through all your expenses: fixed and discretionary (meaning optional) expenses. Often, you can cut hundreds of dollars of monthly expenses with very little lifestyle change.

Ideas to help you:

  • Only go out once or twice a month for a modest meal…cut out all the frequent stops at coffee shops and cafes.
  • Minimize going to movies or expensive entertainment.
  • Do you really need a boat, RV, boy’s toys in the driveway when they are only used a couple times a year? Look at this honestly and evaluate the real costs. Often, renting is far more practical and can save you thousands!
  • Do you really need 3 or 4 cars in the driveway? For years we  had 2 cars, but for the last year and a half we have managed with one. That’s a huge monthly saving on gas, insurance and repairs.
  • Do you need Netflix, cable, specialty channels and a host of other expensive entertainment services? Consider only having one service if you need one or as we have done for several years, cut all services and  just stream from legal sites. Instead of sitting in front of the TV for hours, considering going for a walk, bike ride, swim or do something fun with your family or a friend.
  • Look at all your insurance premiums (auto, home, rental and even life insurance) and see if you can get better rates and evaluate what you have. This simple exercise can save you hundreds each year. Ask your broker how you can save money.
  • How much are you spending each month on food and household. This can be a real budget-killer for many people if you are not monitoring expenses.
  • Have a budget for clothes, presents and auto repairs so when you have a valid need or want, you have cash to buy these things. As much as possible, don’t go into debt for depreciating things and assets..
  • Have a commitment to have several savings accounts designated for different goals or needs. e.g. one for clothing, one for saving for a major goal like a car or trip, one for auto repairs ( you’ll need a brake job, oil change or new tires someday soon).
  • Too much debt is a serious problem for many people. Create a plan and get rid of your highest interest debt payments first. If you need to sell stuff to get out of debt, seriously consider this. Understand that debt is a trap, and one of your deadliest enemies to your financial well-being. It causes relational crisis, incredible stress and even health issues when it gets out of control. Discipline yourself to save for stuff you want and need!
  • Once you get your expenses down and your debts under control or eliminated, then create a short-term emergency fund, and also mid and long-term investment strategies.

In conclusion: during this challenging season, use the time wisely to re-evaluate your life and the stuff that really matters. If you need some help creating a solid long-term wealth plan, please feel free to reach out to me. bill@fivefoldfinancial.ca or 778-539-7107

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